Are you a Retail Tenant?

Posted on Posted in Commercial Property, Commercial Real Estate, Leasing

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

If you would like to know more about being a Retail Tenant please contact us or visit the website of the Victorian Small Business Commissioner