The NSW Retail Leases Amendment (Review) Bill 2016 was
introduced into the parliament in November 2016 and received assent
on 1 March 2017. The commencement date is yet to be proclaimed, but
we could expect it at any time now.
The amendments to the Retail Leases Act 1994 are the most wide-ranging
amendments made in over a decade. The details of this reform have
been worked on for about the past six years, so it has been a long
time coming. There are 91 amendments to the Act. This article
focuses on ten of the top retail leasing amendments which we
consider to be of most significance to tenants and landlords.
Amendments which strengthen the position of tenants
The five-year minimum term for retail shop leases has
been abolished. This does favour landlords, however in
current practice, landlords are simply requiring tenants to see a
solicitor or conveyancer to sign a certificate which provides that
they are accepting a term of less than five years. This amendment
means tenants will be no longer required to see a solicitor or
conveyancer to sign the certificate.
After the lease has been signed by the tenant and returned to
the landlord, the landlord must give a fully executed
lease back to the tenant within three
If the lease is for a term of over three years, the landlord
must lodge the lease for registration within three
months. However, this can be extended if the landlord's bank is
taking a long time to consent to the lease.
The tenant cannot be required to pay the costs of
consent from the mortgagee.
section 11 of the Act requires landlords to provide a
disclosure statement. If a disclosure statement is
not given within six months of the lease, the tenant may terminate
the lease. The new section 11 adds the provision that if the tenant
terminates the lease, they can now be compensated for any costs
reasonably incurred in connection with entering into the lease.
This includes any fitout costs.
All outgoings must now be fully disclosed.
There is a new provision which provides that a landlord may not
recover any outgoings from the tenant if they were not
At the end of the lease, a bank guarantee must
be returned to the tenant within two months of the
tenant fulfilling all of their obligations.
Assignment of leases (e.g. when your business
is sold) must now follow a specific procedure. It is not very
different to the procedure which is currently followed, except that
there are specific timeframes in which the disclosure statement
must be given to the incoming tenant. Once the landlord has all the
required information, they have 28 days to give their consent, or
otherwise it is assumed that their consent is given.
Benefits to landlords from changes to legislation
The definition of outgoings can now include
legal fees charged in connection with managing, operating,
maintaining and repairing the premises. Of course, under
section 14 a landlord still cannot charge the tenant for the
legal costs of preparing a lease.
A number of uses are now excluded from the Act,
including ATMs, vending machines, telephone boxes and storage
units. This means tenants who wish to use the premises for these
purposes do not enjoy the protection of the Act.
Some of the concepts set out in AS11000 may, at some time in the future, be included in the form of a new draft contract.
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