How Do New Tobacco Laws Affect Landlords in NSW?
This year the NSW State Government is cracking down on the sale of illicit tobacco and vapes, targeting not only those selling these products, but also the landlords turning a blind eye to their tenant’s actions. Plausible deniability is now no longer a valid defence available to landlords when illicit tobacco is being sold from their premises.
As of 1 July 2026, new laws are in force that creates a new offence and penalty for landlords complicit in the sale of illicit tobacco. These laws also create new powers that landlords can use when tenants are discovered to be involved in these illegal activities.
It is essential that all landlords familiarise themselves with this new legislation, prepare themselves to take further steps investigating the activities of their tenants, and arm themselves with the tools to address such instances of illegal activities if they arise.
New Offence and Penalties for Landlords
On 1 July 2026, amendments to the Public Health (Tobacco) Act 2008 (NSW) came into force, introducing a new offence affecting landlords.
Section 11A of the Public Health (Tobacco) Act 2008 (NSW) states that it is now an offence for a landlord to knowingly permit their tenant to use the premises to sell illicit tobacco or vapes. The maximum penalty for this offence is a fine of $165,000, up to one year’s gaol time, or both. Landlords do not have to be actively involved in the illegal activity to commit this offence, passive knowledge is enough to trigger the fines and penalties.
If a landlord is found to have knowledge of illicit tobacco sales, they can rely on the defence that they had a ‘reasonable excuse’ for not reporting the activity, such as a legitimate fear of retaliation by their tenants or any organised criminal groups. The onus is on the landlord to prove the existence of the reasonable excuse to the Court.
The best way for landlords to avoid running afoul of this offence is to report any suspicions that tenants are selling illicit tobacco to NSW Health. This proactive step can help assure the authorities that the landlord was not passively allowing the activity.
New Powers for Landlords
The new tobacco laws give NSW Health the power to issue up to 90-day closure orders to premises found selling tobacco illegally. They can extend these up to 12 months with Court permission.
As a result, under s50J of the Public Health (Tobacco) Act 2008 (NSW), landlords now have the power to terminate a lease with 28 days’ notice once an illegal tobacco closure order is made for a premises. A tenant subject to a closure order and subsequent lease termination is not entitled to bring proceedings against the landlord or seek mediation, and a landlord cannot be held liable for damages in respect of such termination.
This power allows landlords to minimise their damage and losses when tenants are found to be selling illegal tobacco and NSW Health issues a closure order.
Conclusion
While the NSW Government continues its crackdown on illegal tobacco and vapes, it remains clear that landlords must always do due diligence into new tenants and their retail practices. Until these laws are tested in the Courts, it remains unclear as to how landlords are expected to balance their tenant’s rights to peaceful occupation of premises with ongoing and active surveillance of the tenant’s retail activities.
Sources
https://www.health.nsw.gov.au/news/Pages/20260507_01.aspx
If you would like to republish this article, it is generally approved, but prior to doing so please contact the Marketing team at marketing@swaab.com.au. This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.
For further information please contact:
Michael Byrnes, Partner
Phone: + 61 2 9233 5544
Email: mjb@swaab.com.au
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.
[View Source]