On 22 September 2020, the Retail Leases Amendment Act 2020 (Vic)received Royal Assent and made changes to the Retail Leases Act 2003 (Vic) which affect both landlords and tenants in Victoria.
The key changes are:
Essential Safety Measures (ESMs): If agreed between the landlord and tenant, the landlord may recover from the tenant the costs of (or part of the cost) installation, repairs or maintenance work in respect of an essential safety measure. This provision applies to existing and new leases provided that, for existing leases, there is an express provision to the above effect.
Disclosure Statements: The landlord must provide to the tenant a disclosure statement and a copy of the proposed list (which includes the particulars of the tenant, the rent and terms) at least 14 daysprior to entering into a retail premises lease. A failure to do so will result in the term of the lease commencing 14 days after the disclosure statement and the proposed lease were provided to the tenant (irrespective of what the lease says). If there are changes to the proposed lease, then the landlord must notify the tenant of such changes when the new proposed lease is given. A failure to do so will result in a penalty imposed on the landlord.
Options to Renew: Landlords must give a written notice to the tenant which sets out the date by which the option to renew the lease may be exercised, the rent payable for the first 12 months under any renewed term of the lease, the availability of an early rent review and cooling off period, and any changes to the most recent disclosure statement.
Upon the exercise of an option to renew, the landlord must provide a disclosure statement which:
- sets out any changes to the previous disclosure statement provided; and
- must include information that is current from a date which is within 3 months of the provision of the disclosure statement.
Early rent reviews: Where a retail lease provides for a market rent review, then the tenant may request an early rent review by giving the landlord writing notice setting out the matters in s 28(1A) (see the matters under “Options to Renew” above).
Cooling of period: In the event where a tenant exercises its option to renew a retail lease and has not requested an early rent review, the tenant may give a written notice within the cooling off period (14 days) that it no longer wishes to exercise the option to renew the lease.
Security deposits: If the tenant performs all of its obligations under the lease, then the landlord must return the security deposit to the tenant within 30 days after the lease ends. The previous position was that the security deposit must be returned “as soon as practicable”.
Both landlords and tenants in Victoria should review their existing retail lease to determine their obligations under the retail lease. If you are thinking of entering into a new retail lease or exercising an option to a retail lease, you will need to ensure that you are complying with the new requirements regarding the disclosure statements and provision of a copy of the proposed retail lease.
Should you require a review of your new or existing retail lease, or the drafting or negotiation of a new retail lease, please contact Rockwell Bates and our Tax and Advisory Team of lawyers can assist you.