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A disclosure statement presents an overview of the key commercial terms of the lease and discloses the possible operating expenses which a tenant pays in addition to rent. For instance, a tenant’s make good obligations at the end of the lease. Retail leasing legislation regulates the terms a statement must include, and so they vary from state to state.
We break down what landlords should include in a disclosure statement in each state and territory.
New South Wales
Legislation
Key Disclosure Items
Retail Leases Act 1994 (NSW)
The annual base rent under the lease.
Whether there is turnover rent in addition to the base rent (this is usually a percentage of the annual profit the tenant makes).
Total estimated outgoings, promotion and marketing costs for the tenant during the first year of the lease.
The term of the lease.
The expected commencement date of the lease.
The estimated handover date of the premises.
Whether the tenant has an option to renew the lease when it ends.
Whether the lease gives the tenant an exclusive right to use the property in a permitted manner.
Victoria
Legislation
Key Disclosure Items
The Retail Leases Act 2003
Annual base rent under the lease.
Whether there is turnover rent in addition to the base rent (this is usually a percentage of the annual profit the tenant makes).
Estimated outgoings and promotion and marketing costs for the tenant in the first year of the lease.
Term of the lease in years and months.
Estimated commencement date of the lease.
Estimated handover date of the property.
Any option to renew the lease.
Whether the lease gives the tenant an exclusive right to use the property in a permitted manner.
Whether there is turnover rent in addition to the base rent (this is usually a percentage of the annual profit the tenant makes).
Estimated outgoings and promotion and marketing costs as well as tenant’s contribution to sinking fund in the first year of the lease.
The term of the lease in years and months.
The commencement date of the lease.
The handover date.
Any options for renewal and how the tenant can exercise the option.
Whether the lease gives the tenant an exclusive right to use the property in a permitted manner.
Australian Capital Territory
State
Key Disclosure Items
Leases (Commercial and Retail) Act 2001
The landlord’s accounting period (if this period is not a standard financial year).
An estimate of outgoings the tenant must contribute under the lease in an itemised form for the first accounting period under the lease.
Northern Territory
State
Key Disclosure Items
Business Tenancies (Fair Dealings) Act 2003
The identification and location of the shop.
The approximate area of the property.
The proposed lease term and any option periods.
The rent payable and the method of calculating the rent.
The timing of rent reviews and how the landlord will conduct the review.
The tenant’s share of outgoing expenses.
The permitted uses of the premises.
The details of any work to be carried out on the site.
The date when the tenant can occupy the premises.
South Australia
State
Key Disclosure Items
Retail and Commercial Leases Act 1995
The address, lettable area and permitted uses of the shop.
The term of the lease.
The base rent payable under the lease.
Any other rent payable under the lease and the basis of its calculation.
Each category of outgoings the tenant must pay or reimburse and an estimate of the tenant’s annual outgoings in each category.
Whether the amount the tenant is required to pay towards outgoing includes a profit for the landlord and, if so, the percentage profit or the basis on which the profit is to be calculated.
The nature of any other monetary obligations imposed on the tenant under the lease and, if possible, an estimate of the annual costs of complying with those obligations.
Any options for renewal and how the tenant can exercise the option.
The legal consequences of breach of a term of the lease (including early termination of the lease by the tenant).
Key Takeaways
A disclosure statement provides a ‘snapshot’ of the lease so the tenant can decide whether they want to proceed with the transaction. Landlords should ensure they provide tenants with a disclosure statement setting out key terms of the proposed lease. If you have any questions or need assistance drafting your lease agreement and disclosure statement, get in touch with our specialist commercial leasing team on 1300 544 755.
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