(27.10.2015) Increased Red Tape? The Retail Shop Leases Bill

The Queensland Government has introduced the Retail Shop Lease Bill (the Bill) into Parliament which proposes changes to the Retail Shop Leases Act (the Act).

What is the Intent of the Act & Bill?

018_29c6_largeThe object of the Act is to “… promote efficiency and equity in the conduct of certain retail businesses in Queensland”. The Bill proposes to amend the Act to “… reduce the regulatory burden for the Queensland retail sector, while continuing to safeguard the interests of retail lessees”.

What is a “Retail Shop”?

In the Bill, a “retail shop” (to which the Act will apply), means premises that are situated in a retail shopping centre or used wholly or predominantly for the carrying on of a “retail business” (being a business prescribed by regulation).

What are the Changes?

Some of the key changes proposed are that:

  1. The following are, for all intents and purposes, excluded from the operation of the Act:
  • A retail shop with a floor area of more than 1000m2;
  • Premises in a theme or amusement park;
  • Premises at a flea market, including an arts and crafts market;
  • Premises used for an information, entertainment, community or leisure facility, telecommunication equipment, ATMs, vending machines, storage and parking;
  • Non-retail businesses located in a single-level building if a quarter or less of the building is retail area;
  • Non-retail businesses located in a multi-level building if the level the business is located on contains 25% or less retail area.
  1. Importantly, when exercising its option to extend the term of the lease, a landlord must give a tenant a current “disclosure statement” within 7 days after receiving the tenant’s notice of exercising the option to renew.

This requirement does not apply if the tenant gives the landlord a “waiver notice”, stating that the tenant agrees to waive the landlord’s obligation to give a disclosure statement. Further, if a Landlord fails to comply with their disclosure obligation, a tenant may terminate a retail shop lease by giving written notice to the landlord within 6 months after the tenant has entered into the lease.

Further Red Tape?

It is commercially sensible, in our opinion, that large commercial landlords with significant resources and legal acumen, (such as those that operate large shopping centres), are required to comply with the more onerous requirements imposed by the Bill.

Conversely, small landlords (such as small family run companies, partnerships, or trusts) should not, in our opinion, be required to comply with further disclosure obligations, particularly where these obligations have been satisfied before commencement of the initial term of a lease.

In a situation where a lease has, for example, been satisfactorily implemented before renewal of an option, the changes which the Government has proposed seem altogether confusing, onerous, and potentially costly, for small landlords.

It is for this reason that we hope the changes do not pass Parliament (or are significantly amended beforehand), in order to reduce, and not increase, red tape, for small landlords.

Do you need advice about a retail shop lease or a commercial matter? Contact Darling Downs Conveyancing today on (07) 4616 9600, or via our contact page.

(Disclaimer: This article was written by Shelby Battaglene, Trainee Lawyer, and Thomas Rowan, Lawyer. The information contained in the article is by way of general advice only. You should not rely on the advice in this article without first obtaining legal advice specific to your individual legal needs).