On 25 May 2016, the Retail Shop Leases Amendment Act 2016 was enacted to amend the regulation of retail leasing in Queensland.
The 2016 amendments to the Retail Shop Leases Act 1994 (“Act”) commenced on 25 November 2016 and apply prospectively from that date.
This means the amendments will apply to any retail shop lease entered into on or after 25 November 2016.
The amendments brought significant changes to the Act including the coverage and the preliminary disclosure obligations for a retail shop lease. Both Landlords and Tenants should be aware of these changes and what effects they may have on the tenancy relationship.
Exclusions to a Retail Shop Lease
As a result of the 2016 amendments, the Retail Shop Leases Act 1994 has clarified the meaning of a retail shop lease by specifically excluding a lease of:
- a retail shop with a floor area of more than 1000m2;
- premises used wholly or predominately for the carrying on of a business by a Tenant for the Landlord, as the Landlord’s employee or agent;
- premises for non-retail business purposes, if the premises are located on a level of a retail shopping centre or a single level building, where at the time the lease is entered into, 25% or less of the total lettable area of the level of the building is not used for retail business purposes; and
- premises used for an automatic teller machine (ATM) or vending machine, where the premises would be within a common area of a retail shopping centre if it were not leased.
In addition, the 2016 amendments clarify the preliminary disclosure obligations for a retail shop lease, including allowing for the waiver of the disclosure period by Tenants and Assignees who are not major lessees.
The disclosure obligations for a retail shop lease not only apply to parties entering into a new lease but include the requirement to provide a Tenant exercising an option to renew with a current disclosure statement. Both Landlords and Tenants should be aware of their disclosure obligations and the strict time constraints that apply, particularly as a Tenant has the ability to terminate a retail shop lease within 6 months if the Landlord does not comply with their disclosure obligations, or the disclosure statement they provided is defective.