The Retail Industry has six months to prepare for significant
changes to retail leasing in light of significant amendments to the
Retail Shop Leases Act 1994 being passed on 10 May 2016. We give
you a snapshot of the highlights (and lowlights) below. You need to
act now to ensure a seamless transition to the new landscape.
We have noted some key changes, however the breadth of the
changes are much wider and the transitional arrangements are
The amendments contain significant changes to the Act,
Is it really a retail shop?!: Retail Shop Lease
The Act will no longer apply to any retail shop with a floor
area of over 1,000m2. The additional requirement that
the lessee also be a listed corporation has now been removed. In
addition, some non-retail businesses operating in multi-level centres or on pad sites and
stand-alone buildings may also be exempted. ATMs are also
specifically excluded, clarifying some previous
No double dip: compensation for relocation and
The amendments clear up the potential for "double dip"
compensation under sections 43 and 46, confirming lessors are not
liable to pay compensation under section 43 where the lessee is
entitled to relocation/demolition compensation (under section 46G
Reviving the ratchet: major lessees can waive rent
Ratchet clauses and multiple rent review mechanisms can now be
commercially agreed with major lessees, provided the lessee gives
notice to the lessor waiving the rent review provisions in the Act.
Legal and financial advice is no longer required for major
Seven-day disclosure waiver
The amendments allow the lessee to waive the seven-day
disclosure period for providing disclosure statements and draft
leases, however they will still need to be given before the lessee
enters into the lease.
I told you so!: notice of anticipated
Leases can limit compensation for disturbance within one year
after the lease is entered into, provided the lessor gave the
lessee written notice detailing the nature, likelihood, predicted
length and effect of the disturbance. We expect to see these
disclosures being utilised in leases entered into leading into or
during construction or re-development of shopping centres.
I'm in, no wait I'm out: withdrawal of exercise
Lessors must provide lessees with a current disclosure statement
within seven days of exercise of an option, unless the lessee
waives the requirement. The lessee then has an option to withdraw
the notice of exercise of option for any reason, within 14 days of
receiving the current disclosure statement. Failure to provide the
current disclosure statement will also give the lessee a
termination right in the first six months of the option.
Be specific: refurbishment obligations must include
Refurbishment obligations in leases need to be specific
including details of the nature, extent and timing of the
refurbishment. Any provisions that do not meet the requirement will
What's your plan: marketing plans now
Lessors who recover promotion or marketing levies must give the
lessee an annual marketing plan showing the details of the
lessor's proposed spending on promotion and advertising. The
marketing plan must be provided at least 1 month prior to the start
of each accounting period.
If you are involved in the retail leasing industry there
are steps that you can take now to be ready for the changes:
Lessors planning redevelopment need to rethink disclosure
arrangements and lease terms now to ensure they can take advantage
of the compensation changes.
Lessors should have their standard leasing documentation and
disclosures reviewed and updated to comply.
Agents and lessors should update their heads of agreement
Lessors and centre managers should review their outgoings
statements to ensure compliance and should start preparing the new
Lessees, lessors and agents should learn about the changes and
how they will impact on their day to day operation.
If you have any questions or require assistance to make the
transition to the new Act our Brisbane Real Estate team can be
contacted at any time. We will also be hosting a seminar designed
to bring both lessors and lessees up to speed with the
changes. Please contact the Real Estate team to register your
interest in the seminar.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
Persons listed may not be admitted in all states and
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).