Changes to Retail Leasing Law

The Retail Leases Amendment Act 2020 (the Act) received royal assent on 22 September 2020. 

The Act introduces amendments to both the Retail Leases Act 2003 (Vic) and Building Act 1993 (Vic) (and Regulations) affecting the obligations and rights of both landlords and tenants of retail premises. Key amendments include:

Essential Safety Measures (ESM)

Landlords can now recover cost of installation, repair and maintenance of ESMs as an outgoing from the tenant. This will need to be agreed in writing between the parties and included in the retail lease agreement. The obligation for building safety remains with the landlord.

The amendments are retrospective so if there is an existing clause in the retail lease agreement prior to 22 September 2020, these costs can be passed onto the tenant from 23 September 2020 onwards.

Security deposit to be returned within 30 days

Landlords must return security deposits within 30 days of the tenant complying with its obligations under the lease. The previous requirement was for the tenant to return the security deposit ‘as soon as practicable’. 

Tenant's right to cool off

A tenant who has exercises an option to renew a lease, without requesting an early rent review, has 14 days to cooling off , provided that they give written notice that they no longer wish to renew the lease.

Where the lease provides for a market rent review, the tenant may request an early rent review within 28 days of receiving the landlord’s renewal notice. 

Additional disclosure obligations on landlord

Landlords are now required to provide tenants with a disclosure statement and copy of proposed lease at least 14 days before the commencement of the new lease. This has increased from 7 days and leases will not commence until 14 days have lapsed from the date that the completed documents are provided to the tenant.

Significant penalties apply for non- compliance with these disclosure obligations.

The Act also introduces a three (3) month lead time for landlords to provide tenants written notice of the last date that an option to renew can be exercised. This notice must set out the the following:

  • the last date by which an option to renew can be exercised;
  • the rent payable for the first 12 months of the new lease term;
  • the availability of an early rent review and cooling of period; and
  • any changes to the most recent disclosure statement.

If you have any questions about your legal obligations on how to negotiate a current or new lease agreement, feel free to contact our office on (03) 8590 8370. 

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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