What Retail Leases Act Changes Mean for Landlords and Agents
The amendments to the Retail Leases Act 1994 come into effect on 1 January 2006. The changes affect new leases entered into after 1 January 2006. This is an overview of how the changes will affect Landlords and Agents.
Retail Bond Scheme
A Retail Bond Scheme is to be established. It is common practice for retail leases to contain terms requiring payment of a security bond by the tenant at the commencement of the lease. For all new leases commencing after 1 January 2006, where the security takes the form of a cash payment rather than a bank guarantee the security must be lodged within 20 days of receipt with the Security Bond Scheme.
Additionally for all existing leases all security bonds must be lodged with the Retail Bond Scheme by 1 April 2006. Forms to lodge a Bond are available from the Retail Tenancy Unit on 1300 795 534.
Retail Tenancy Guide
When entering into negotiations for a new lease Landlords, or their agents must give prospective tenants a disclosure statement, the draft lease and a retail tenancy guide.
New Disclosure Statements
Additional information has to be included in disclosure statements. In relation to Shopping Centre leases there needs to be more detailed break up of the outgoings relating to running the centre, in addition to information about the total traffic through the centre, tenancy mix, annual turnover of the shopping centre. The disclosure statement should set out the details of any anticipated disturbance to the lessee’s trading during the term of the lease.
The increased detail is intended to allow prospective tenants to make more informed decisions about how successful their business is going to be if a lease is taken up in those premises.
Changes to Lease Clauses
Some of the clauses of precedent leases will need to be updated to ensure leases entered into after 1 January 2006comply with the amendments to the Retail Leases Act. Changes are required in the following areas:
-
Mechanisms for market rent reviews and determination of market rent review disputes;
-
Outgoings that can be recovered from tenants, and outgoings estimates;
-
Calculation of reasonable relocation expenses
-
Lease assignment and provision of disclosure statements to assignee.
For more information regarding the amendments to the Retail Leases Act you can visit the Retail Tenancy Unit website www.retail.nsw.gov.au and you can contact Goldrick Farrell Mullan www.gfm.com.au Sydney (02) 9267 7311 Newcastle (02) 4925 3311.
Back