Retail and commercial leasing law changes

A number of significant changes to retail and commercial leasing laws come into effect tomorrow, which will provide greater protections for tenants.

“These changes are the result of a very comprehensive and extensive consultation process with stakeholders and an independent review by former District Court Judge Alan Moss,” Small Business Commissioner John Chapman said.

“For example, landlords will be required to provide prospective tenants with a disclosure statement and a draft lease as soon as negotiations commence.

“This is to ensure there is full transparency around the terms and conditions at the earliest stages of negotiation.”

Mr Chapman said another change is the requirement for landlords to provide prospective tenants with a copy of the retail and commercial leasing guide produced by the Small Business Commissioner.

“This Guide is an important document and, in general, sets out the rights and obligations of all parties as well as some very practical advice,” Mr Chapman said.

“Another change is the requirement for landlords to return a bank guarantee within two months after a lessee has completed all obligations.

“There have been significant increases in penalties in a number of areas for breaches of the Retail and Commercial Leases Act 1995 and it is critical that landlords, agents and legal practitioners who provide advice or services to lessees and lessors acquaint themselves with these changes which were passed in Parliament in December 2019.”

The Small Business Commissioner will also have the authority to both grant full or part exemptions for leases from the Act and to certify exclusionary clauses under a lease which is designed to allow a lease term to be less than five years if both the tenant and landlord agree.

Other changes to the Act include a formal process to allow adjustment of the rental threshold under the Act which currently is $400,000 per year; the ability to require a bond of up to three months rent (previously up to four weeks rent); and 
clarification of the application of the Act to public and overseas companies.

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