Retail Leases Act: What Small Business Tenants Need to Check

A retail leases act sets minimum protections for shop, cafe, clinic and agency tenants that a landlord cannot remove by contract. If your premises is covered, the landlord must give you a disclosure statement before you sign, cannot pass on certain outgoings, and must honour a renewal option if you meet the conditions. The exact rules differ between states, so check the rules where you are before you negotiate.

Key takeaways

• A retail leases act applies to premises used wholly or predominantly for a prescribed retail business, or in a retail shopping centre.
• The landlord must give you a disclosure statement before you sign, listing rent, outgoings and any planned capital works.
• Outgoings such as land tax and capital costs are generally excluded, but you must check your state's rules.
• A renewal option must be exercised in writing within the window stated in the lease.
• Cap any personal guarantee or replace it with a bank guarantee before you sign.

Is my lease covered by a retail leases act?

Each state defines a retail shop slightly differently. In New South Wales the relevant Act covers premises used wholly or predominantly for a prescribed retail business, or in a retail shopping centre. The list of prescribed businesses is long and includes cafes, hairdressers, medical clinics and many professional services. In Victoria the Act applies to premises used wholly or predominantly for the sale or hire of goods by retail or the retail provision of services, with a rental threshold that changes each year. In Queensland the Act covers retail shops in a retail shopping centre or used for a retail business listed in the regulations. If you are unsure, ask a lawyer to confirm which Act applies to your address.

What must be in the disclosure statement?

The disclosure statement is the single most important document you receive before signing. In New South Wales the landlord must give you a Lessor's Disclosure Statement at least seven days before the lease starts. It must list the lettable area, the rent, the outgoings you are liable for, any capital works planned, and whether the lease includes a demolition or relocation clause. In Victoria the landlord must provide a Disclosure Statement at least 14 days before the lease is signed, covering rent, outgoings, any mortgagee consent, and the tenant's fit-out obligations. In Queensland the lessor must give a Disclosure Statement at least seven days before the lease is signed, with similar details plus any trading hour requirements.

Real clause you will see: "The Lessee acknowledges receipt of the Lessor's Disclosure Statement dated 1 June 2024 and warrants that it has relied on its own enquiries." That acknowledgement does not waive your rights under the Act. If the statement is missing, incomplete or misleading, you may be able to terminate early or claim compensation. Ask the landlord to re-issue a corrected statement before you sign, and keep a dated copy of everything you receive.

Which outgoings can the landlord pass on?

Outgoings are the building costs the landlord passes to you. The Acts limit what can be passed on and how it must be reported. In New South Wales the landlord cannot charge you for land tax, capital costs or depreciation. You must receive an estimate before each financial year and an audited statement within three months after year end. In Victoria the landlord cannot pass on land tax or capital expenditure unless the lease was entered before 2003 and expressly allows it. The landlord must give you an annual estimate and a statement of actual outgoings. In Queensland the lessor cannot charge land tax, and capital expenditure is only recoverable if the lease says so and the expenditure benefits the premises.

Real clause you will see: "The Lessee shall pay a proportionate share of all outgoings including rates, taxes, insurance, management fees and any other expenses incurred by the Lessor." That wording is too broad. Ask for a schedule that lists each recoverable outgoing by name, excludes land tax and capital costs, and requires an annual estimate and audited reconciliation. If the landlord refuses, you have a statutory argument that the clause is void to the extent it conflicts with the Act.

How do I protect my renewal option?

A renewal option lets you extend the lease without negotiating a new deal. The Acts protect that right if you follow the process. In New South Wales the option must be exercised in writing during the window stated in the lease, usually three to six months before expiry. The landlord cannot refuse if you have substantially complied with the lease. In Victoria the tenant must give written notice within the option period. The landlord can only refuse on limited grounds such as a genuine intention to demolish or the tenant's persistent default. In Queensland the option must be exercised in writing at least one month before the term ends, and the landlord cannot unreasonably withhold consent.

Real clause you will see: "The Lessee may renew for a further term of three years by giving written notice not less than six months and not more than twelve months before the expiry of the Term." Put that window in your calendar now. If you miss it by a day, the option can lapse. Ask the landlord to confirm the exact dates in writing and to send you a reminder letter, or set your own reminder with a buffer of two weeks.

What should I know about rent reviews?

Rent reviews are separate from the option itself. The Acts do not set the review method, but they require transparency. Common methods are fixed percentage, CPI, or market review. A market review on renewal should be based on comparable retail rents, not the landlord's asking price. Ask for a cap on any market review, for example CPI plus one percent, and a right to dispute the valuer's figure through an independent expert. In New South Wales and Victoria the valuer must be independent. In Queensland the lease should name the appointment process.

What about fit-out and make good?

Retail leases often require a specific fit-out standard and a make good at the end. The Acts do not prescribe the standard, but they require the landlord to disclose any known requirements before you sign. In New South Wales the disclosure statement must list any fit-out obligations. In Victoria the landlord must disclose any refurbishment schedule. In Queensland the lessor must disclose any trading hour or fit-out requirements. Ask for a schedule of condition with dated photos at the start, and limit make good to returning the premises to that condition, fair wear and tear excepted. Push back on clauses that require you to upgrade to a new brand standard every few years.

Can the landlord relocate me or demolish the building?

Relocation and demolition clauses let the landlord move you or end the lease early. The Acts impose strict conditions. In New South Wales the landlord must give at least three months' notice, pay your reasonable relocation costs, and offer alternative premises of similar size and position. In Victoria the landlord must give six months' notice and compensate you for fit-out, relocation and loss of goodwill. In Queensland the lessor must give three months' notice and pay compensation assessed by a valuer. If your lease has a relocation clause, ask for a cap on how many times it can be used, a minimum notice period, and a right to terminate without penalty if the alternative premises is not suitable.

Personal guarantees and bank guarantees

The Acts do not ban personal guarantees, but they affect how they are enforced. In New South Wales a guarantee from a director must be in writing and the guarantor must receive a copy of the disclosure statement. In Victoria a guarantee is unenforceable if the landlord failed to give the disclosure statement. In Queensland the lessor must give the guarantor a copy of the disclosure statement. Never sign an unlimited guarantee. Ask for a cap of six to twelve months' rent, an expiry date tied to the lease term, or a larger bank guarantee instead. If the business is new or the rent is material, have a lawyer review the guarantee before you sign.

Can I assign or sublet the lease?

If you sell the business or need to downsize, you will want to assign the lease. The Acts say the landlord cannot unreasonably withhold consent. In New South Wales the landlord must respond within 28 days and can only refuse on reasonable grounds such as the assignee's financial capacity. In Victoria the landlord must not unreasonably withhold consent and must give reasons in writing. In Queensland the lessor must act reasonably and cannot impose conditions that defeat the assignment. Ask for a clause that deems consent granted if the landlord does not respond within 21 days, and that the landlord's costs are capped at a fixed amount.

Where do disputes go?

Each state has a low-cost tribunal for retail lease disputes. In New South Wales it is the Civil and Administrative Tribunal. In Victoria it is the Victorian Civil and Administrative Tribunal. In Queensland it is the Queensland Civil and Administrative Tribunal. The lease must not oust the tribunal's jurisdiction. If the lease says disputes go to arbitration or a court, that clause may be void for retail lease matters. Ask for a clause that requires mediation first, then the relevant tribunal, with each party bearing its own costs unless the tribunal orders otherwise.

AxiomRisk reads your lease and quotes the risky sentences word for word, explains why each one matters, and gives you the exact counter-ask to send the landlord. Upload your file at check your contract free and see the issues before you sign.

Next step

Get your contract checked before you sign. Check your contract free.