Knowledge is power. Recently we have had a few clients who have not been fully aware of the rights and obligations that operate under the Retail Leases Act (1994) NSW (the Act). These are some key issues both landlords and tenants should be aware of, from the perspective of a typical tenant:
1. “My landlord says the Act doesn’t apply to me as I only have a licence to occupy the premises”:
It doesn’t matter what the agreement between the landlord and tenant is called, it is still capable of being a Retail Lease and falling within the scope of the Act. All the tenant needs is a right to occupy the premises, whether exclusively or not.
2. “My landlord is only willing to offer me a 3 year term, with no option to renew”:
A tenant with a retail lease is entitled to a minimum 5 year term (including any option period). The only way to waive this right is to obtain independent legal advice and provide a certificate evidencing the advice to the landlord.
3. “It is getting to the end of my lease and the landlord will not tell me whether I am going to be offered a new lease”:
Under the Act the landlord is required to give between 6 and 12 months notice of its intentions at the end of the lease (reduced to 3 to 6 months notice for a lease of less than 12 months). If the landlord fails to do so then the tenant can require a 6 month extension of their lease, from the date on which the landlord indicates its intentions, SO LONG AS the tenant asks for this extension before the lease would otherwise have expired.
4. “I am applying for a new lease and the landlord wants a Lease Application Fee”:
A landlord, or its agent, is prohibited from asking for, or accepting, any money as a precondition of the grant of a lease (advance payment of rent and security deposit excepted). Penalties apply.
5. “I have just had a market review and the rent valuation came in at less than my current rent. My landlord is pointing to a term of the lease stating that the rent cannot reduce”:
Any provision of a retail lease that attempts to stop rent from reducing after a market review is of no effect. If a market review has just been undertaken then the rent valuation is the new rent, regardless of whether it is higher or lower than the previous rent.
These are just some of the protections afforded to retail tenants under the Act. Please note that in order for the Act to apply you have to be in a retail premises (as defined by the Act) and not subject to a number of exceptions (mostly relating to very short term leases, or large premises). If you have any doubt about whether the Act applies, or would like to discuss your rights, please feel free to contact our commercial team on (02) 9411 4466.