In Queensland, retail leases — a specific type of lease unique to retail shops — are regulated by the Retail Shop Leases Act 1994 (Qld) (the Act). The Act gives tenants minimum protections that the landlord must observe. This article explains these minimum protections so you can check whether your Queensland retail lease protects your legal rights.
The Act Only Applies to a Queensland Retail Lease
You must first determine whether your Queensland retail lease is covered by the Act. To be covered, your lease must be for a retail shop.
Retail shops include premises that are:
- inside a retail shopping centre; or
- used predominantly for carrying on a retail business (for example, selling goods).
The Act defines leases for these shops as “retail leases” and so grants them minimum protections. However, the Act also says that it does not apply to shops that are, for example:
- ones with a floor area of more than 1,000 square metres;
- inside a theme or amusement park;
- a temporary retail stall;
- granted by the South Bank Corporation; or
- a premises at a flea market.
As some exceptions are technical, you will need to check whether the Act excludes your Queensland retail lease. However, it covers most small shops in Queensland shopping centres.
The Act requires the landlord to provide the tenant with a disclosure statement prior to them signing the lease. A disclosure statement sets out the main commercial aspects of the premises, such as the rent, rent reviews and details of outgoings. Prospective tenants use it to determine whether they should enter the lease.
The landlord must provide the disclosure statement at least seven days before the tenant signs the lease. They should also provide the tenant with a draft copy of the lease to allow them to review the proposed lease documents. If the landlord does not provide the disclosure statement at least seven days in advance, the tenant may be able to later terminate the lease.
The tenant must then provide a lessee’s disclosure statement. This lists any representations made by the landlord, such as promises the landlord made to entice the tenant to lease the premises.
Prohibition Against Key Money and Goodwill
The Act prohibits the landlord from requesting key money or goodwill from the tenant in exchange for giving them the lease. This also means the landlord cannot request that a tenant pay a certain amount of money in order for the landlord to accept the renewal of the lease. This provision protects the tenant from making unnecessary payments to the landlord.
The Landlord Cannot Charge Lease Preparation Expenses
The Act requires that the landlord pay expenses associated with the preparation of a Queensland retail lease, such as legal fees or assessing stamp duty. Therefore, the tenant should check the lease to ensure the landlord has not charged them for these expenses.
The tenant may, however, be responsible for other costs not directly associated with lease preparation such as:
- registration fees;
- survey fees;
- changes to the lease; and
- reasonable costs of the landlord to obtain mortgagee consent.
The Lease Must Detail Outgoings
Outgoings are the landlord’s costs for maintaining the building. These can include costs for:
- provision of security;
- maintaining the common areas; and
- provision of utilities such as lighting and elevators.
The lease must detail the outgoings, including how much the tenant will contribute to maintenance.
The landlord also has accounting obligations. They must give the tenant an estimate of outgoings prior to charging them. They must also provide tenants with an annual audit of outgoings.
Protections for the Assignment of Lease
Assignment involves the tenant transfering the lease to another person, with the landlord’s consent. The landlord cannot ‘unreasonably’ withhold consent to the assignment. For example, an unreasonable refusal would be one that lacks any business justification.
If the landlord then approves the assignment, they must allow the new tenant the same rights as the prior tenant. The landlord also cannot impose new obligations on the new tenant.
Relocation and Demolition Clauses
Some leases may include relocation and demolition clauses. Relocation clauses will require the tenant to relocate. Demolition clauses will allow the landlord to terminate the lease in order to demolish the premises. The Act provides tenants with protections in relation to both.
For relocation, the landlord will need to provide at least three months’ written notice. The new premises also needs to be comparable to the current premises. Furthermore, the landlord must bear the tenant’s costs of relocation, including the removal and replacement of fixtures and fittings and legal costs. If the tenant receives a notice to relocate, they can also decide to terminate the lease within one month of receiving the notice to relocate.
For demolition, the landlord will need to provide at least six months’ written notice before terminating the lease. The notice must set out the details of the demolition. As with relocation, the landlord must pay the tenant compensation for any loss or damages incurred. The tenant can also vacate the premises prior to the termination date, as long as they give the landlord seven days’ notice.
Notice Required at Termination of the Lease
The Act requires the landlord to provide a notice prior to the lease coming to an end. The landlord must issue this notice at least six months prior to the end of the lease, but cannot send it more than 12 months before. If the landlord fails to provide a notice, the tenant may request an extension of the lease by six months.
The Retail Shop Leases Act provides minimum protections for tenants with a Queensland retail lease. The Act does not apply to all retail leases, but it will apply to most small shops in a shopping centre. Once you have determined that your retail lease is covered, review the lease thoroughly to ensure that it contains the minimum protections guaranteed by the Act.
If you need assistance with ensuring that your Queensland retail lease gives you all the rights to which you are entitled, call LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.
Was this article helpful?
We appreciate your feedback – your submission has been successfully received.