Entering into a new commercial lease can be a daunting experience, especially if you’ve never done it before, and understanding what your rights are is crucial. In Victoria, it’s important to work out if you are a Retail Tenant under the Retail Leases Act 2003. Most small businesses are – you don’t have to be a retail shop to fall under the Act. It’s in your best interest to know this before entering into a lease.
How to determine if you are a Retail Tenant under the Act
In the Retail Leases Act 2003, a Retail Premises means:
“premises, not including any area intended for use as a residence, that under the terms of the lease relating to the premises are used, or are to be used, wholly or predominantly for – a) the sale or hire of goods by retail or the retail provision of services; or b) the carrying on of a specified business or a specified kind of business that the Minister determines under section 5 is a business to which this paragraph applies”
The easiest way to determine if you are a retail tenant under the Act is to know if you are not one.
You are not a ‘retail tenant’ and excluded from the coverage of the Act if:
- Your premises are not to be used for the sale or hire of goods and/or services
- You are running a business on behalf of the landlord
- You are a listed corporation or a subsidiary of a listed corporation
- Your occupancy costs exceed $1million per annum
- Your lease is less than one year (including any continuation)
- You are a service business located on the third storey or higher of an office building
- Your premises or business are determined by the Minister
The benefits of being a Tenant under the Retail Leases Act
The Retail Leases Act 2003 commenced on 1 May 2003 and is there for the protection of both Landlord and Tenant. As a Tenant under the Retail Leases Act, you have the following benefits:
- A Landlord must provide you with a minimum five (5) year lease term. This can be made up of lease options.
- A Landlord must provide you with a disclosure statement prior to signing the lease
- A Landlord cannot pass on the cost of Land Tax to the Tenant
- A Landlord cannot pass on their legal costs to the Tenant
- A Landlord cannot prevent the rent from reducing at a market rent review