On 10 January 2011, the NSW Government released an exposure
draft of the Retail Leases Amendment Bill 2011. If enacted
in its current form, it would result in a number of significant
changes to landlords' responsibilities in retail lease matters.
The Bill is intended to address a number of criticisms of the
Retail Leases Act 1994 (NSW) and correct what is perceived
as a power imbalance between larger landlords and small retail
A summary of the key proposed changes is set
Further disclosure requirements for the landlord (s11)
The tenant may require the landlord to provide an updated
disclosure statement before the tenant exercises an option for a
Undisclosed outgoings (s12)
The tenant will not be required to contribute to outgoings that
are not disclosed in the disclosure statement. This poses a
challenge for landlords of new shopping centres, who may not be
aware of all of the outgoings likely to be incurred over the life
of the lease at the time of issuing the disclosure statement.
Mandatory registration of retail shop lease (s15)
Retail leases of three years or more will be required to be
registered on the title of the premises or building in which the
premises are located. A summary statement will need to be prepared
and included. This is intended to make comparable lease information
publicly available to tenants, who will then be able to obtain
details of other registered leases.
Claiming on bank guarantees (s16)
The Director General will be entitled to publish guidelines in
relation to the claiming on bank guarantees held by the landlord as
security for the tenant complying with its obligations under the
Prohibition of passing land tax on to tenants (s26)
To bring NSW in line with the retail provisions in relation to
land tax in Victoria and Queensland, the landlord will be
prohibited from passing on land tax to the tenant as a recoverable
Increased notice period (s33)
The current requirement for the landlord to give the tenant two
months' notice of any alteration or refurbishment that may
adversely affect the tenant's business will be increased to six
Relocation of the tenant (s34A)
In the event that the landlord invokes the relocation clause,
alternative premises which are offered to the tenant must be of
reasonable comparable commercial value to the existing premises
leased by the tenant. If the landlord does not offer appropriate
premises and the tenant terminates the lease, the tenant is
entitled to claim depreciated fit out costs from the landlord as
The landlord cannot require a tenant to make any repairs or
improvements after the landlord has given the tenant a notice of
termination on grounds of demolition.
Promotion levy (s56)
The tenant is entitled to a refund of contributions towards
shopping centre advertising and promotion that remains unspent at
the end of the lease.
Administrative Decisions Tribunal (ADT, s73)
The monetary limit of the ADT will increase to $750,000 (from
Summary – Future of the Retail Leases
Amendment Bill is currently unclear
The Bill is only in draft form and significant amendments could
be made to it before it is enacted. It is also possible that
opposition to the Bill will prevent it from being enacted
altogether. Swaab Attorneys will monitor developments in this area
and publish updates when changes occur.
Swaab Attorneys was the highest ranking law firm and the
13th best place to work in Australia in the 2010 Business Review
Weekly Best Places to Work Awards. The firm was a finalist in the
2010 BRW Client Choice Awards for client service and was named the
winner in the 2009 Australasian Legal Business Employer of Choice
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Whilst option to purchase clauses are more in commercial properties, they are now being included in residential leases.
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