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Movement in the Victorian Retail Leasing Space

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Movement in the Victorian Retail Leasing Space

Retail Leases Amendment Bill 2019 (VIC)

The Retail Leases Amendment Bill 2019 (VIC) (Bill) was introduced into parliament at the end of October.

The Bill aims to provide further clarity and certainty around tenant and landlord obligations under the Retail Leases Act 2003 (VIC) (Act).

The purpose of the Bill is to amend the Act:

(i) to clarify the obligations of landlords and tenants under retail premises leases in respect of essential safety measures;
(ii) to require landlords to give information to tenants under retail premises leases in a more timely manner;
(iii) to clarify the timeframe within which landlords must return security deposits to tenants under retail premises leases;
(iv) to create a new early rent review process for tenants under retail premises leases; and
(v) to establish a cooling off period for the renewal of retail premises leases in certain circumstances.

If passed, the Bill will:

• allow tenants to request a rent review prior to exercising their option for a further term. Currently, landlords are not required to provide the amount of the rent before tenants exercise their option;
• extend the period that prospective tenants have to consider the landlord’s disclosure statement before entering into a retail lease from 7 days to 14 days;
• require landlords to return security deposits to tenants within 30 days of the tenant completing its obligations under the lease. Currently, the Act provides that landlords must return security deposits “as soon as practicable”; and
• allow landlords to recover from tenants the cost of essential safety measures if the tenant has agreed to bear the cost.

New Ministerial determination exempting farm leases from the Retail Leases Act 2003 (VIC)

Following uncertainty as to whether the Act applies to leased farming premises, the Minister issued a determination confirming that the Act does not apply to leases where the premises is used wholly or predominantly for commercial farming purposes.

Can a lease jump in and out of the Retail Leases Act 2003 (VIC)?

In Verraty Pty Ltd v Richmond Football Club Ltd [2019] VCAT 1073, the Tribunal determined that a lease can jump in and out of the Act.

That being said, if a premises is not a retail premises at the commencement of the lease, the premises cannot become a retail premises mid-way through the lease. The premises must be a retail premises at the time the lease is entered into or renewed for a lease to jump in and out of the Act throughout the lease.

Verraty Pty Ltd v Richmond Football Club Ltd [2019] VCAT 1073 looked at the application of the Act where the amount of rent and outgoings payable under the lease changed from above and below the $1 million requirement under the Act during the life of the lease.

If you wish to learn more about any of the above, please contact the writer, Kristen Vassilopoulos on (03) 9604 9400.

Disclaimer: This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.

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