Recent changes to the Retail Leases Act 2003 (the “RLA”) and Building Act 1993

Recent changes to the Retail Leases Act 2003 (the “RLA”) and Building Act 1993

On 22 September 2020 the Retail Leases Amended Act (the “Act”) 2020 received royal assent introducing significant changes to the Retail Leases Act 2003 (Vic) and Building Act 1993 (Vic).

The essential safety measures provisions under the Act became operational from the 23 September  2020 with the rest due to become operational from 1 October 2020.

The purpose of the Act inter alia was to amend the Building Act 1993 and Retail Leases Act 2003 to clarify the obligations of landlords and tenants under retail premises leases in respect of essential safety measures and required landlords to give information to tenants under retail premises leases in a more timely manner.

Highlights of the material changes to the RLA and Building Act 1993 are as follows;

Amendment of Retail Leases Act 2003

• Landlord’s disclosure statement and proposed lease 

  Landlords are required at least 14 days ( previously 7 days) before entering into a retail premises lease to give the tenant a disclosure statement in the prescribed form and a copy of the proposed lease in writing including particulars of the tenant, the rent and the term of the proposed lease.

• Security deposit 

  Landlords are required to refund a tenant’s security deposit within 30 days from the lease end date provided the tenant has complied with its obligations under the lease. This brings certainty to the previous “as soon as practicable” provision.

• Early rent reviews 

  Where a retail premises lease provides for a market review the tenant may request in  writing to the landlord for an early rent review within 28 days after the landlord has given the relevant option to renew notice.

•  Cooling off period 

  Tenants will be entitled to 14 days cooling off period after the day on which they exercise an option to renew the lease provided they do not request for an early market rent review at the time of exercising their option to renew under the lease.

• Recovery of essential safety measures (ESM) costs as outgoings 

  A Landlord may recover ESM costs as an outgoing by agreement with the tenant under a lease.

• Option to renew notice & Landlords additional disclosure obligations 

  The act has reduced the option to renew lease notice period to 3 months (previously 6-12months) with additional disclosure obligations. Significant penalties apply for non-compliance with a landlord’s disclosure obligations.

Amendment of Building Act 1993

• A tenant or occupier cannot recover from the landlord or owner any expenses incurred by the carrying out in respect of an essential safety measure by way of repairs or maintenance work or an installation at the premises if the tenant or occupier has agreed to bear the said expenses under a retail premises lease to which the Act applies.

This article is general in nature and does not constitute legal advice. If you require assistance with any of the topics dealt with in this article we strongly recommend you seek legal advice or contact our office to speak with our experts.