Current New South Wales legislation known as the Retail Leases Act 1994 will be significantly amended now that the Retail Leases Amendment (Review) Bill 2016 has been passed by both Houses of Parliament. Both landlords and tenants of retail premises should take note of these amendments to be prepared for when these changes take effect.
The commencement date of these provisions is yet to be determined however the major changes include the following:
The Act confers a right of compensation on a tenant who terminates a retail lease during the first six months. The New South Wales Civil and Administrative Tribunal (NCAT) may now determine retail lease disputes involving claims up to $750,000. This has been increased from the previous $350,000 limit and is anticipated to provide greater access to justice.
2. No minimum term
Section 16 which requires a retail lease to be a minimum of five years has now been removed from the Act.
The definition of outgoings to be amended and the legislation shall require the landlord to provide a full disclosure in the Disclosure Statement of all outgoings. Failing to do so will prohibit the landlord from recovering undisclosed outgoings.
4. Compulsory Registration
Leases must now be lodged for registration within three months of execution and failure to lodge may result in penalties.
5. Copy of Executed Lease
The landlord is now obliged to provide the tenant with a copy of the signed lease within three months after the lease has been returned to the landlord by the tenant. This period may be extended in the case of delay by the mortgagee.
6. Retail Premises
Certain premises are now excluded from the Act, including vending machines, ATMs, children’s rides and stalls in a market (except a permanent retail market). An office tower constructed above a retail shopping centre is not covered by the Act.
7. Online Sales
Revenue from online transactions will not be included in turnover rent for the purpose of calculating percentage rent.
8. Mortgage Consent Fees
A landlord can no longer charge the tenant for mortgagee consent fees.
9. Bank Guarantee Return
Bank guarantees are to be returned within two months after the tenant has performed all obligations under the lease.
Section 35 of the Act has been amended to confirm that the protection applies despite whether only part or the entire building is being demolished.
A tenant shall not be liable to a landlord once the lease has been assigned in accordance with the Act.
We at Kazi Portolesi Lawyers believe that was important to make you aware of these approaching important changes to enable you to plan your business activities in the retail space moving forward.