Changes to the Retail Leases Act. Boring topic? Yes. Important? If you are a tenant or landlord of a retail shop, also yes.
The Retail Leases Act came into effect in 1994 and besides a couple of minor touch ups in 2004 and 2012, has remained unchanged until now.
Here are some of the key changes now in effect: Lease execution and registration – landlords must return a signed copy to the tenant, and if the term is three years or longer, must also register the lease, both within three months.
There are financial penalties for failure to comply. Outgoings – are now defined far more broadly, however, in order to claim outgoings from a tenant, a landlord must fully disclose all outgoings it intends to recover, and reasonable estimates. If there is a gap between estimates and actuals that cannot be reasonably explained, then the landlord may have to wear it.
Compensation – if a tenant terminates in the first six months due to defects in a disclosure statement, the landlord could now be liable for costs incurred, which could include fit-out costs. Ouch. Demolition – protections for tenants have been extended where the lease contains a demolition clause, now covering part of a building (not just whole), and only where it is impractical to demolish, repair, renovate or reconstruct without vacant possession. Mortgagee consent fees – cannot be recovered from the tenant. Five-year minimum terms – are no longer. Agreements to Lease – are now covered by disclosure obligations, as well as leases themselves. There are quite a number of additional changes, so jump on the NSW Small Business Commissioner’s website for a full rundown.
The changes are designed to further protect the little guy from the big guy. Perhaps not so much when the little guy happens to be the landlord.