Retail and commercial leases changes to commence on 1 July 2020

The Retail and Commercial Leases (Miscellaneous) Amendment Act 2019 (No 47 of 2019) commences operation on 1 July 2020.

Key changes to the Retail and Commercial Leases Act 1995 include:

• a lease may “fall” in and out of the Act, depending on whether the lease exceeds the rent threshold at any time – there are some exceptions to this where a lease is registered;
• clarification that the terms public company and subsidiary have the same meaning as in the Corporations Act 2001;
• a requirement to provide to the lessee a fully executed copy of the lease within one month of its execution by the lessee and to lodge leases for registration within one month of execution by the lessee (if they are required by the lessee to be registered);
• clarification that a “new” lease will not be created on holding over, even if the holding over period exceeds six months;
• a requirement to return a bank guarantee within two months after the lessee completes performance of the obligations under the lease for which the bank guarantee is provided as security;
• disclosure statements are no longer required to be served on renewal; and
• provision for leases entered into on or after the relevant day to be excluded from the application of the Act, where the lessor is local government and the lessee is of a class specified by the Regulations (see further discussion below).

1 July 2020 is now fixed as the “relevant day” for the application of many of these changes.

The accompanying Retail and Commercial Leases (Miscellaneous) Variation Regulations 2020 (Variation Regulations) were Gazetted on 14 May 2020, to also come into operation on 1 July 2020.

The Variation Regulations:

• set out the fee payable to the Small Business Commissioner for providing a certificate to a lessee in relation to the waiver by that lessee of its right to a minimum five year term, which certificate was previously only able to be provided by a lawyer;
• make some changes to the list of bodies or organisations from which representatives will be appointed to sit on the Retail Shop Leases Advisory Committee; and
• make some minor changes to the prescribed form of the disclosure statement, including making express reference to “emergency services levy” as an outgoings category (this has previously usually been included in the “other” line).

Interestingly and importantly, there are no (additional) classes of leases generally excluded from the application of the Retail and Commercial Leases Act 1995. Nor are there any classes of lessees excluded where a local government authority is the lessor. It was anticipated that the Variation Regulations would specify such lessees, as the variations to the Retail and Commercial Leases Act 1995 expressly allowed for it.

This means that while future Regulations may address this issue, for the time being the Retail and Commercial Leases Act 1995 will continue to apply to leases and licenses granted by local government to community and sporting groups (and that otherwise fall within the scope of the Act) unless a specific exemption is sought from the Small Business Commissioner under section 77 of the Act for that lease or licence.