Those of you who own a retail shop, or are operating a retail business under a lease, should be aware that recent changes to the Retail Leases Act NSW 1994 (the Act) have a significant effect on Retail Leases going forward.
Some of the changes are:
- 5 Year Term – There is no longer an automatic right of Tenants to a minimum 5 year lease term. As such care must be taken during negotiations to make sure both parties are happy with the duration of the lease.
- Lessors Disclosure Statement (LDS) – Giving a misleading LDS, or failing to give an LDS, to a tenant has always given the tenant a potential right of termination. The new regime expands on this by also allowing the Tenant to recover their costs of entering the lease (including their fitout costs). As such it has never been more important to complete and issue an accurate LDS to your tenants in accordance with the Act.
- Outgoings – It is more important than ever that a Landlord takes care when completing the Outgoings section of a Lessor’s Disclosure Statement. Under the new regime, if you understate the anticipated outgoings, without good cause, then the outgoings you may recover from the Tenant will be capped at your estimates, for the life of the lease.
These are just some examples of the recent changes. If you would like to discuss these, or any other leasing issues, please contact our Commercial Law Team.