In a significant development for both landlords and tenants of retail shop leases in South Australia, the prescribed threshold for annual rent under the Retail and Commercial Leases Act 1995 (SA) (Act) has been increased. This change, introduced through the Retail and Commercial Leases (Prescribed Threshold) Amendment Regulations 2024, will take effect from 1 July 2025. This amendment raises the rent cap that determines whether a retail shop lease falls within the scope of the Act.
Prescribed Threshold under Section 3(1a) of the
Act
Section 3(1a) of the Act defines the "prescribed
threshold" in relation to rent payable under a retail shop
lease. The provision states:
"prescribed threshold", in relation to rent payable under a retail shop lease, means—
(a) the amount of $400 000 per annum exclusive of GST; or
(b) if a greater amount is prescribed by the regulations for the purposes of this definition and the Act—the amount so prescribed.
This threshold plays a critical role in determining whether the statutory protections afforded to tenants under the Act apply to a retail shop lease. Where the annual rent payable exceeds the prescribed threshold, the lease will fall outside the application of the Act, subject to any other applicable exclusions under the Act.
Regulations
In accordance with the statutory mechanism allowing for
the adjustment of the prescribed threshold by regulation, the
Retail and Commercial Leases Regulations 2010 have been
amended through the insertion of a new regulation 3A. The new
provision states:
"For the purposes of the definition of prescribed threshold in section 3(1a) of the Act, the amount of $420,000 per annum exclusive of GST is prescribed."
This amendment increases the annual rent threshold from $400,000 per annum to $420,000 per annum (exclusive of GST) for the purpose of section 3(1a) of the Act.
Commencement
The increased rent threshold is scheduled to come into
operation on 1 July 2025. Until that date, the current prescribed
threshold of $400,000 per annum (exclusive of GST) will continue to
apply.
Implications for Landlords and Tenants
From 1 July 2025, retail shop leases with an annual rent
exceeding $420,000 (exclusive of GST) will fall outside the scope
of the Act, subject to any other applicable exclusions under the
Act. Notably, this change will apply to both new and existing
leases. Leases that were previously excluded from the Act due to
rent exceeding the current $400,000 per annum (exclusive of GST)
threshold may now fall within its scope if the annual rent payable
from 1 July 2025 does not exceed the revised $420,000
threshold—again, subject to any other exclusions under the
Act.
Landlords and tenants are encouraged to review their leasing arrangements to assess how these changes may affect their rights and obligations under the updated statutory framework.
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.
