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Amendments add protection for both retail landlords and tenants

Property Law News | April 2017

The Retail Leases Amendment (Review) Act 2017 No.2 (NSW) [“the Amendment”] came into effect on the 1 March 2017. The purpose of the Amendment was to increase protection for landlords and tenants alike by ensuring greater transparency and efficiency within the sector. With the introduction of the Amendment, people may be wondering how and why they are affected.

The key elements of the Amendment are outlined as follows:

  1. Requirement for five-year term: Prior to the Amendment, the minimum term for retail leases was 5 years unless a Section 16(3) Certificate was obtained to waive the minimum term. A fundamental issue which often arose under this provision of the Retail Leases Act involved parties unjustly relying on this statutory requirement towards the later stage of the relevant lease. This minimum term requirement has now been removed by the Amendment.
  2. Clarified lease registration process: This aspect of the Amendment aims to clarify the process of registering leases. Previously all leases of more than 3 years were required to be in ‘approved form’, however failed to specify the need for registration. The Act now clearly states that leases of more than 3 years must be registered by the landlord within 3 months of the date that the lease is returned to the lessor.
  3. Liability for undisclosed outgoings: The lessee will no longer be liable for outgoings that are not disclosed by the Lessor’s Disclosure Statement. Further, if a Lessor’s Disclosure Statement provides a further estimate for less than what is billed and there is no reasonable basis for the further estimate, the lessee will only be held liable for the original estimate.
  4. Simplified Lessor Disclosure Statement: The Act has simplified the procedure for generating a Lessor Disclosure Statement, and in doing so has created a new form that will assist the lessor with this process by allowing changes both before and after the lease has been entered into.
  5. Increased jurisdiction of the NSW Civil and Administrative Tribunal (NCAT): The existing jurisdiction for NCAT was limited to retail disputes of up to $400,000. Given the ever increasing costs for businesses, the previous cap resulted in both landlords and tenants failing to receive adequate justice. The Amendment has increased the cap for claims in NCAT up to $750,000, which more accurately reflects the nature of retail disputes.

Prior to entering into a retail lease, it is important to seriously consider the recent updates in the Retail Leases Amendment (Review) Act 2017 No.2 (NSW), as well as the protections and responsibilities imposed under this Act.

If you have any questions or concerns about retail leasing, contact us at Forum Law for a free 30-minute conversation on (02) 9560 3388 or in our friendly office in Leichhardt where parking for clients is free.

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