Changes to the Retail Leases Act: how will you be affected as tenant or landlord?
The Retail Leases Amendment Bill (Bill) proposes reforms to the Retail Leases Act (Act) in an effort to make retail leases fairer and easier to understand.
The proposed changes will coincide with the recent ministerial direction regarding retail leasing for commercial farming purposes, considered in our article: Victorian Farmers, will changes to retail leasing apply to you?
The key elements of the Bill include:
requiring landlords to inform their tenants of the proposed rent prior to any option being exercised to extend the lease;
allowing landlords to pass on the costs of repairs, maintenance and installation of essential safety measures (ESM) when agreed to in a lease;
allowing a period of 14 days for tenants to consider the terms of a proposed lease;
setting a maximum period of 30-days for the return of security deposits from landlords; and
providing an option to tenants to request an independent early rent review if they disagree with the proposed market rent.
As the Act currently stands, tenants have a period of seven days to consider a prospective lease before deciding whether or not to enter into that lease. By allowing an extra 7 days tenants may seek the appropriate advice and have the peace of mind of entering an agreement where they are fully aware of the relevant terms and conditions.
The Act presently requires that security deposits should be returned to tenants “as soon as practicable”. The proposed change will positively impact the cash flow of a small business venture and tenants will be better equipped to move onto their next enterprise and grow their existing business.
In a win for landlords the Bill confirms that landlords can pass on the cost of repairs, maintenance and installation of ESM to the extent agreed in the lease. While most leases are already negotiated with these costs included, the changes will remove ambiguity from parties’ rights and obligations under the Act.
The Bill set to be passed through both houses of Parliament and become law later this year.
For further information or advice, please contact:
Vittoria De Stefano
Principal Lawyer
T: 03 5226 8520
E: vdestefano@ha.legal
Jamie McCallum
Senior Associate
T: 03 5226 8563
E: jmccallum@ha.legal
Joseph Flanagan
Lawyer
T: 03 5226 8504
E: jflanagan@ha.legal
