The Retail Leases Act (Vic) 2003 (Act) has been the governing legislation for many retail and commercial leases for over 15 years. But 2020 is a year of change.
On 15 September 2020, the Victorian Government passed the Retail Leases Amendment Act 2019 (Vic) (Amendment). The Amendment puts even more pressure on landlords in Victoria, in addition to those they face in the context of COVID-19. The changes introduced in the Amendment are consistent with the consumer-friendly nature of the Act which has always aimed to protect tenants under leasing arrangements.
What are the key changes?
- Essential safety measures: if drafted correctly, a lease may require the tenant to pay for the cost of carrying out repairs or maintenance work in respect of:
- an essential safety measure; or
- the installation of an essential safety measure for which the tenant has agreed to pay.
- Disclosure statements: landlords will be required to provide a disclosure statement and a copy of the proposed lease to the tenant at least 14 days (instead of 7 days) before entering the lease. Failing to do so will effectively delay the commencement date of the lease.
- Security deposits: a landlord must return a tenant’s security deposit within 30 days of the lease ending instead of ‘as soon as practicable’ — so long as the tenant has complied with its obligations.
- Obligations regarding renewal: at least 3 months (instead of 6 months) before the last date a tenant may exercise its option to renew, the landlord must:
- give the tenant notice of the option; and
- provide additional information including the rent payable for the first 12 months of the renewed lease.
- Early rent review: if the lease provides, a tenant will have the right to require an early determination of market rent at the commencement of any option term, within 28 days of receiving the landlord’s renewal notice. The tenant’s option period will be extended until 14 days after the date that the reviewed market rent is determined. This change is designed to ensure that tenants are aware of the rent they will be paying prior to exercising their option.
- Cooling off period: if the lease provides for an early rent review and the tenant does not request it, but the tenant exercises its option to renew the lease, the tenant is entitled to a 14-day cooling off period after it exercises its option.
The majority of these changes will come into effect on a date ‘to be proclaimed’ or 1 October 2020, whichever is earlier.
We can help.
Landlords should urgently implement any necessary changes to lease management systems and procedures to ensure they comply with the Amendment. The Bespoke Leasing team can assist landlords and tenants to understand the changes introduced by the Amendment and how they affect their rights and obligations.