The main legislation covering retail leasing in Victoria is the Retail Leases Act 2003. The commencement date of the Retail Leases Act 2003 was 1 May 2003. When current leases under the Retail Tenancies Act 1986 or the Retail Tenancies Reform Act 1998 are renewed from 1 May 2003, they become subject to the Retail Leases Act 2003. For more details about the Retail Leases Act 2003, click here.

The Retail Leases Act 2003 does not apply to all premises or businesses. Retail leases legislation applies to premises that are used wholly or predominantly for the sale or hire of goods by retail or the retail provision of services, and where the occupancy cost is less than $1 million per year (the occupancy cost of retail premises is the combined cost of rent and outgoings). 
Retail leases legislation does not apply:
•  to tenants in the business of wholesaling, manufacturing or storage.
•  tenants that are listed corporations or subsidiaries of listed corporations
•  leases for a term of less than one year unless consecutively renewed
• premises or businesses as determined by the Minister for Small Business (click here for details). You can also refer to the Guidelines, What are retail premises? by clicking here. For further details, contact the VSBC on (03) 9651 9316.

Tenancies that are let to businesses that are primarily involved in the retail supply of goods and services are covered by the Retail Leases Act 2003. These include premises such as the shops and premises for consumer, business, and trade services or hire of goods.  Examples of these include estate agents, doctors, and automotive repairs. The Minister for Small Business has made a number of determinations regarding premises that do not constitute retail premises. Click here for the determinations. You can also refer to the Guidelines, What are retail premises? by clicking here. For further details, contact the VSBC on (03) 9651 9316.

Section 50 of the Retail Leases Act 2003 states that a landlord cannot pass on land tax to a tenant. Note that this differs to the previous Acts under which a landlord could pass on land tax to a tenant. For further details, contact the VSBC on (03) 9651 9316.

What protection do the unconscionable conduct provisions of the Retail Leases Act 2003 provide?  

Part 9 of the Retail Leases Act 2003 provides that both landlords and tenants are prohibited from engaging in unconscionable conduct against the other. Factors that may be taken into account include the relative strengths of the bargaining positions of the parties, the extent to which the parties acted in good faith, and the extent to which the parties were not reasonably willing to negotiate the rent under the lease. For further details, contact the VSBC on (03) 9651 9316, or refer to sections 76-80 of the Retail Leases Act 2003.

A landlord or real estate agent must return a tenant's bond if the tenant has performed all his/her obligations under the lease (as defined in the lease, however this is generally reinstatement of the premises). Subject to this, the landlord or real estate agent should return the bond as soon as practicable after the lease ends. If the bond (and any accrued interest) is not returned, or only part of the amount has been returned and the tenant feels entitled to receive the bond back in full, the matter can be referred to the VSBC for dispute resolution. For further details, contact the VSBC on (03) 9651 9316.

Section 25 of the Retail Leases Act 2003 requires a landlord to notify the Victorian Small Business Commissioner of lease details within 14 days of the parties signing a new retail lease or renewing an existing lease. Details that must be notified include details of the parties' names and addresses, the date of signing of the lease by all parties, the expiry date of the initial term of the lease and the expiry date of the lease if the lease is extended by all options. Leases can be notified to the VSBC via the VSBC website, by fax or post. Click here for details.

Under the Retail Leases Act 2003 a landlord is obliged to give the tenant a copy of the lease signed by both parties within 28 days of the date of the tenant giving the signed lease to the landlord. If a tenant does not receive a signed copy of the lease within 28 days of giving a signed copy to the landlord or entering into the lease, a tenant may give the landlord notice to terminate the lease. If there are any issues regarding this aspect of the Retail Leases Act 2003, the matter can be referred to the VSBC for dispute resolution, or contact the VSBC on (03) 9651 9316.

A retail lease is a legally binding document and therefore both parties must agree to end a lease. It may be that the landlord does not wish to end the lease, in which case, the tenant may be responsible for all of the landlord's reasonable out of pocket expenses in finding a new tenant. These costs may include rent until the premises are re-let and the agent's re-letting fees, subject to a landlord's duty to mitigate loss. The actual amount the tenant is responsible for is a matter of negotiation between the parties. If a dispute arises, either of the parties may refer the matter to the Small Business Commissioner for mediation. For further details, contact the VSBC on (03) 9651 9316.

A retail lease is a legal document and is binding to all parties who sign it. If a tenant is still required to fulfil obligations under the lease, but is failing to do so because he/she has left the premises without notification and is no longer paying rent, then the landlord has a legal right to re-enter and terminate the lease on the grounds of the tenant's abandonment of the premises. The landlord has the right to take action against the tenant to recover any money lost because of the tenant's departure. Contact the VSBC to discuss options, which may include mediation with the tenant or obtaining an order from the Victorian Civil and Administrative Tribunal (VCAT) that the tenant pay the outstanding money. Note that a claim for rent only is not a dispute as defined by the Retail Leases Act 2003 and can be referred directly to the VCAT Civil Claims List. For further details, contact the VSBC on (03) 9651 9316.

For a retail premises lease, section 52 of the Retail Leases Act 2003 provides an obligation on the landlord to maintain the premises and this overrides any lease provisions to the contrary. These obligations require the landlord to repair the premises so that the tenant can carry on his/her business uninterrupted. If a tenant believes the landlord should be repairing the building under the terms of the lease, or under the legislation, but is failing to do so, contact the VSBC on (03) 9651 9316, or notify the VSBC of the dispute.

For new retail premises leases, the rent will initially be set by negotiation. For existing leases, the rent will be determined by the rent review provisions in the lease and specifications in the lease. Throughout the lease the rent may be increased, if the lease provides for it, by a fixed percentage or amount, or by a certain figure determined by the consumer price index (CPI). Upon renewal of the lease, the lease usually provides for a market review of the rent. Determining the market value of the premises usually takes into consideration a range of factors (e.g. location of the premises, size of the premises, condition of the premises, etc). For further details, contact the VSBC on (03) 9651 9316.

The procedure for establishing market rent is that the landlord proposes a rental to the tenant; the tenant is entitled to negotiate the rental with the landlord (including the parties arranging a valuer to determine the rent); if the parties cannot agree on a valuer to determine the rent, th Small Business Commissioner can appoint a specialist retail valuer. Sections 35 and 37 of the Retail Leases Act 2003 outline the procedure for determining market rent. For further details, contact the VSBC on (03) 9651 9316.

Under the Retail Leases Act 2003, a tenant can, under some circumstances, claim compensation for interference from a landlord. Reasonable compensation for loss or damage (other than nominal damage) suffered by tenant may be paid for such reasons as the landlord (or someone acting on behalf of the landlord): inhibiting the the tenant's access to the premises; unreasonably taking action that causes significant disruption to the tenant's trading at the premises failing to rectify as soon as practicable any breakdown of plant or equipment that is not under the tenant's care or maintenance. Section 54 of the Retail Leases Act 2003 covers the issue of relocation of the tenant's business. For further details, contact the VSBC on (03) 9651 9316. Disputes over compensation can be referred to the VSBC for dispute resolution.

The landlord can only force a tenant to move premises if a there is a relocation clause in the lease. If the lease does not contain a relocation clause, the landlord cannot move the tenant. If the lease does contact a relocation clause, it should specify the conditions under which the landlord can relocate the tenant. If the Retail Leases Act 2003 applies to the lease, certain statutory conditions apply to the lease e.g. the new premises must be 'reasonably comparable' to the existing premises; the rent for the new premises is to be generally the same as for the existing premises; and the landlord must pay the tenant's reasonable costs of the relocation. In addition to the lease, the Act also provides that the disclosure statement (provided by the landlord to the tenant) must specify whether the lease contains a relocation clause and if the landlord has any plans for the building in which the premises are located during the term of the lease which may invoke the relocation clause. Section 55 of the Retail Leases Act 2003 covers the issue of relocation of the tenant's business. For further details, contact the VSBC on (03) 9651 9316. Disputes over relocation can be referred to the VSBC for dispute resolution.