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Recent amendents to Retail Leases legislation in Victoria

The Retail Leases Amendment Act 2019 is now in play.

Landlords and tenants should make sure they are across the changes when entering into new retail leasing arrangements, or signing up renewals.

So, what has changed?

Landlords can now recover ESM costs from a tenant

This has been hotly disputed for some time now. The legislation now provides for the landlord to recover costs for repair and maintenance work, installing equipment and the installation of fixtures to comply with essential safety measures. Note, however, that in order to recover these types of costs, the lease must specifically include this obligation.

Landlords are required to return security deposits within 30 days

Tenants are entitled to receive their security deposits within 30 days of the end of a lease if they have complied with all of their obligations. The ‘as soon as practicable’ test is no longer valid.

Tenants are entitled to receive more detailed notices in the lead up to a renewal option

The landlord must give a notice to tenants at least 3 months before the last date to exercise an option to renew. The notice needs to include the following information:

· The final date that the option to renew must be exercised;

· The amount of rent for the first 12 months under the renewed lease term;

· The availability of an early rent review if a market rent review is to take place at the start of a further term;

· The availability of a cooling-off period; and

· Any changes to the last disclosure statement given to the tenant (not including rent-related changes).

Failure to provide this information to the tenant may result in the term of the lease being extended by three months from the date the information is provided.

Early rent review

In some cases, tenants may be able to request an early rent review in the lead up to the exercise of the option. The timing of the rent-review determination may extend the timing for exercise of the option.

Tenants are entitled to a 14-day cooling-off period

If a tenant exercises an option to renew and has not requested an early rent review, they are entitled to a cooling-off period of 14 days after exercise of the option.

New leases - landlords are required to give disclosure statements earlier

From October 1, 2020, a landlord needs to provide a disclosure statement and the proposed lease to the tenant 14 days (not 7 days) before the lease is due to commence, is signed or rent is payable (whichever is earlier).


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