Victorian Retail Tenancy Laws

In Victoria Retail Commercial Tenancies are subject to and governed by the Retail Leases Act 2003. The Act regulates the rights and responsibilities of tenants and landlords in Victoria and came into effect on the 1st of May 2003.

The Retail Leases Act 2003 superseded The Retail Tenancies Act of 1986 and the Retail Tenancies reform Act of 1998.

The Act applies to most commercial retail shop premises but not all businesses. If you have tenants under a lease where the premises are used for the sale or hire of goods or the provision of retail services, then the tenant and the Landlord have a number of rights and obligations under the Act.

There are however some situation where tenants are excluded from coverage under the Act. “Retail Premises” does not include those where the tenants are in the business of wholesaling, manufacturing or storage.

While a landlord has a fundamental right of control over the use of its property, this right does not extend to engaging in unfair business practices.

Recent amendments clearly offer further protection to tenants, the Government regarding them as the less powerful party in most retail leasing transactions. As a result, the amendments require greater responsibility and pro-active behaviour from the landlord.

The Law in Victoria, is clear:

A landlord in a retail lease must not, in connection with the lease, engage in conduct that is misleading or deceptive to a tenant or guarantor. A party who suffers damage by reason of misleading or deceptive conduct of another party may make a claim for compensation.

If a landlord fails to give sufficient information it is guilty of Unconscionable Conduct.

Once negotiations begin (the disclosure stage), the landlords and their agents are by law required to provide a copy of a government – prepared Information Brochure . This retail tenancy guide is freely available from the Small Business Commissioners web site and should be given to any prospective tenant as soon as negotiations begin.

1. For new leases a landlord has to provide the tenant with

• A copy of the unsigned Retail Lease Agreement (with the names and addresses of the parties included)
• A Disclosure Statement. The disclosure statement details all financial items which a tenant might be expected to pay. These relate to important aspects of the lease, such as annual maintenance and repair of the building as well as rates, taxes, levies, rent and other outgoings.
• A government prepared information brochure when negotiations are commenced, and in no case less than 7 days before the lease is entered into.

That is, negotiations must continue for 7 days; a landlord can’t just sign a tenant up on the spot. A copy of the proposed lease has to be provided once it has been signed. If the landlord doesn’t supply a completed copy of the lease, within 28 days of it being signed, or the disclosure statement is incorrect, the tenant can terminate the lease.

In particular, the Act renders void lease provisions which require any tenant’s payment for contribution to fit out that has not been disclosed in a disclosure statement.

In most states law entitles the tenant, if he/she gives you the proper notice, to withhold payment of rent until the disclosure requirements are met (but any rent they do pay they can’t get back).

Like the law in most other states in Victoria you need the permission of the Small Business Commissioner if you want a lease term of less than 5 years. If you want such a permission, you simply apply to office of the Office of the Small Business Commissioner on the proper form.

Under the Retail leases Act 2003 landlords cannot recover the costs associated with preparing the lease and disclosure document.

Fortunately its not all bad news for landlords because RP Emery and Associates are providing an alternative for the Do-it-yourself Landlord.

Professionally prepared Retail Tenancy Lease Kits are now available to help the DIY landlord negotiate and complete a compliant Retail Lease Agreement. The kit gives you all the tools you need combined with a clear course of action that will lead you out of the Retail Tenancy minefield.

To read more about our DIY Retail Tenancy Leasing Kits click here.