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Retail Leases Amendment (Review) – Act 2017 No. 2

The Retail Leases Act 1994 applies to most retail shop leases in NSW. Last year, the NSW Parliament passed legislation to amend the retail leasing regime in NSW.

The Act took effect 1 July 2017 and has brought significant reforms impacting both landlords and tenants of retail premises in NSW.

Key changes include:

Abrogation of a minimum 5 year term

With the removal of Section 16 of the Act, a landlord is no longer required to offer a tenant a minimum 5 year term.

Bank guarantees

It is now mandatory for the lessor to return the Bank Guarantee to the tenant within 2 months of the lessee performing all duties covered by the bank guarantee.

Now Excluded from the Act

ATMs, vending machines, public telephones, children’s rides, internet booths, private post boxes and certain storage uses.

Mortgage consent fees

The lessee can no longer be charged for mortgage consent fees.

Outgoings

If an outgoing is not provided in the disclosure statement, the landlord will not be able to recover it from the tenant.

Gross sales and online purchases

The lessor can only require payment of turnover rent for goods or services where the transaction takes place by the customer at the retail shop or the goods are dispatched from the premises.

NCAT jurisdictional threshold raised to $750,000

Previously, the monetary limit on the jurisdiction of the NCAT (NSW Civil and Administrative Tribunal) was only up to $400,000. The rise in the threshold should mean they are able to hear a higher number of cases.

More compensation for lessees

Where the lessor did not provide a disclosure statement, the lessee can break the lease within 6 months of the start date and can claim costs reasonably incurred while entering into the agreement and for fit out costs.

Lessor’s Disclosure Statement

The Lessor’s Disclosure Statement can now be amended prior to or after the lease has been entered into by agreement between the parties or by NCAT.

https://www.legislation.nsw.gov.au/#/view/act/2017/2/id5

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