From 22 April 2021 the Retail Commercial Leases (Prescribed Lessee) Variation Regulations 2021 came into operation.
This excludes the operation of the Retail and Commercial Leases Act 1995 (SA) (Act) to the majority of Local Government leases to not for profits and other organisations.
Section 4(2) of the Act lists retail shop leases to which the Act does not apply. One of the exemptions is any lease that has commenced after 1 July 2020 under which the lessor is;
- a municipal or district council or other authority with powers and function of local government; and
- the lessee is of a class specified by the Regulations for the purposes of this paragraph (see section 4(2)(g)(i)(B) and (ii)) of the Act).
The Regulations now exclude the following classes of lessee from the application of the Act, where the lessor is a Municipal or District Council or other authority with the powers and functions of Local Government:
"a lessee who is a party to a lease under which the amount of rent payable under the lease does not exceed $50,000.00 per annum (exclusive of GST) and who :
- is registered under the Australian Charities and Not for Profits Commission Act 2012 of the Commonwealth;
- is an entity that is not carried on for the purposes of profit or gain to its individual members and that is, via the terms of its constitution, prohibited from making any distribution, whether in money, property or otherwise, to its members; or
- a lessee that uses the premises the subject of the lease for the provision of health, welfare, community, cultural, sporting or recreational services on a non-commercial basis, is prescribed for the purposes of 4(2)(g) of the Retail and Commercial Leases Act."
What does this mean?
It means that leases and licences that fall under the above exclusions will now be exempt by the Act. This will include most leases and licences entered into by Councils. In short, commercial arrangements will not come within the exempted class.
Before entering into a lease or a licence, Councils as landlords and clubs, community groups, charities and other not for profit organisations who lease or licence premises from Councils, will need to consider the Regulations carefully to determine whether or not they apply.
This amendment is significant for the local government sector and in particular those responsible for administering property leases and licences. In many cases, they will be relieved of the obligation to comply with the Act including the provision of disclosure statements, exclusionary certificates in relation to the minimum 5 year term and all of the other obligations imposed by the Act.
It will also mean that tenants who previously received the consumer protections under the Act no longer will.
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.