In Queensland, retail shop leases are regulated by the Retail Shop Leases Act (Qld) 1994 (“the Act”). The Act sets out certain rights and responsibilities for both landlords and tenants. It aims to provide a fair and transparent leasing framework for both parties.
Under the Act, a lease is deemed as a retail shop lease if:
- The premises is located within in a Retail Shopping Centre as defined under the Act in section 5D; or
- The premises is being used wholly or predominately for the carrying on of a retail business as defined under the Act in section 5C with the full schedule of retail businesses, goods or services outlined within Schedule 1 of the Retail Shop Leases Regulation (Qld) 2016. Some examples of retail businesses include convenience stores, cafes, restaurants, beauty salons, service stations, and newsagents.
General commercial leases do not have minimal standards and are negotiated by the parties to reach an agreement on lease terms. These leases typically favour the landlord and do not include substantial legislative protection for a tenant. Due to the regulation of retail shop leases, tenants have greater protection under the Act, some of which include:
- Disclosure Requirements: The Act mandates that landlords must provide tenants with a disclosure statement prior to entering into the lease. This statement should contain information such as the terms of the lease, the rent amount, the duration of the lease, and any outgoings the tenant is responsible for paying.
- Rent Review: The lease should outline the method for reviewing and adjusting the rent. The Act also prevents the inclusion of ratchet clauses which prevent rent from decreasing under a rent review regardless of changing market conditions.
- Outgoings: The Act prohibits the landlord from including certain outgoings in the lease. For example, a landlord cannot charge land tax on to a tenant under a retail shop lease.
- Dispute Resolution: The Act provides for dispute resolution mechanisms to resolve any disagreements between the landlord and the tenant.
Prior to entering a lease, we highly recommend seeking legal advice to ensure that landlords and tenants alike fully understand their rights and obligations under the lease, as well achieve the best and desired result. Please do not hesitate to contact us at The Small Business Lawyer to further discuss the benefits and implications of a retail shop lease.