Part 1: What are the changes to Retail Shop Leasing in Qld?

Late last year, the Retail Shop Leases Amendment Bill 2014 (“Bill”) was introduced. Under the Bill there are many changes to the current leasing legislation in Queensland known as the Retail Shop Leases Act, 1994 (Act). This article is just part 1 in a 3-part series on the proposed changes to the retail shop leasing legislation in Queensland. Part 1 will discuss outgoings, the definition of a Retail Shopping Centre, and which leases the Bill will apply to.

Outgoings

There a number of changes with respect to outgoings, including, but not limited to, the following:

• A revised definition of outgoings will not include extra expenses outlaid by the landlord with respect to an insurance claim;
• For those operating retail shopping centres, all estimates of outgoings and audited statements must distribute the management costs into administrative expenses in operating the premises, as well as other managerial costs;
• Lessees will have the right to wait until the lessor has provided the audited statement and/or outgoings estimate before releasing payment;
• In terms of apportioning the outgoings, the common areas will not be counted as part of the shopping centre’s total area. These common areas include:
  • ATM machines;
  • Concierge desks, information points, entertainment or leisure amenities;
  • Storage;
  • Vending machines;
  • Eating areas;
  • Car parks; and
  • Promotional exhibits (Ads, posters, etc)

Retail Shopping Centre

The definition of retail shopping centre has changed and will no longer include levels of buildings that do not have any retail businesses, or separate buildings that do not have any retail businesses.

Entering the lease

In determining when a lease is formally entered into, the first of the following will be regarded as the commencement of the lease:

• Upon all parties signing;
• Upon taking possession (tenant); and
• Upon receiving first rental payment (apart from deposit).

Does the Bill govern your lease?

This is undoubtedly the least clear aspect of the Bill. In general, all leases that are entered into or renewed will come under the Act. With that in mind, certain leases would not come under the scope of the Act, usually because of nature of the lease or the circumstances under which it was entered. For instance, if the premises do not come under the definition of a retail shop until after its commencement date, then the provisions of the Act will not apply to the lease, nor will they apply to an assigned/renewed lease.

However, if the lease was defined in accordance with a retail shop under the Act, and then no longer falls under this definition after the commencement date, the provisions of the Act will still apply to the lease, including to an assigned or renewed lease. The term ‘government lease’ will be incorporated into the Act to identify leases where the ‘tenant’ is actually the government, be it local, state or federal. Under a new government lease, lessees will not have to provide lessee disclosure statements or financial/legal advice reports. Additionally, the lessor does not have to provide the lessee with notice about the end date to exercise an option under section 46.

Finally, the retail shop lease definition will no longer include licences/leases where the area of the premises is more than 1000 metres squared (irrespective of the tenant), vending machines or ATMs.

Contracting out

Currently it is prohibited to attempt to contract out of the Act so that its provisions will not apply. This prohibition will be extended to include other contracts entered into for the purposes of a retail shop lease. One example is a side deed.

Conclusion

Stay tuned for Part 2 on changes to the Retail Shop Leases Act (Qld). The following part will discuss changes to disclosure requirements and market rent reviews. If you need to speak with a LegalVision leasing lawyer, or simply wish to get a quote, get in touch with our Client Care team on 1300 544 755.