Amendments to the Retail Leases Act 1994
Several changes to the Retail Leases Act 1994 came into effect on 1 July, 2017. Following the implementation of these amendments, it’s important to understand what has changed and how it affects both landlords and tenants.
There are 11 vital changes to be aware of:
1. No minimum term – This means that there is no longer a minimum five years term for a rental lease, following the removal of Section 16.
2. Disclosure of outgoings – A tenant won’t be required to pay any amount to a landlord for outgoings unless the liability to pay was disclosed in the Lessor’s Disclosure Statement. Additionally, where an estimate for an outgoing is provided and the estimate is less than the actual amount charged, if there was no reasonable basis for the estimate, then the liability of the tenant for payment is limited to the estimated amount.
3. Copy of lease – Within three months of the lease being returned to the landlord by the tenant, the landlord must provide the tenant with a copy of the signed lease.
4. Compulsory registration – Leases must also now be lodged for registration within three months. Failure to do so may result in penalties.
5. Bank guarantee – Landlords must now return the bank guarantee within two months if the tenant has completed their obligations under the lease.
6. Compensation for tenant – Where the tenant terminates within the first six months for reasons such as the landlord’s failure to provide a Lessor’s Disclosure Statement or providing a Statement which is misleading, a tenant may now claim compensation.
7. No mortgagee’s consent fees – Clarification that a landlord can’t charge a tenant mortgagee consent fees has now been provided.
8. Rectification – The NSW Civil and Administrative Tribunal’s (NCAT) powers to amend and vary a lease have been significantly expanded. NCAT can amend a lease where it is satisfied that the order is necessary to:
a) Correct an error or admissions;
b) Give effect to the intention of the parties when the lease was entered into; or,
c) Give effect to the actual disclosure of information between the parties.
9. Demolition – Section 35 of the Act has been amended in order to allow protection regardless of whether the whole building or only part of the building is being demolished.
10. Online sales – Revenue from online transactions won’t be included in the turnover for the purposes of calculating percentage rate. There are times where this won’t apply such as when goods and services are delivered, provided from or at the retail shop, or the transaction takes place whilst a customer is in the shop.
11. Jurisdictional limit – the NCAT may now determine retail lease disputes involving claims up to $75,000. This increase is anticipated to provide greater access to justice.
If you would like more information on the Amendments to the Retail Leases Act, please contact: