Member Article

A Bill to amend the Retail Leases Act 2003 (Vic) (the Act) has been introduced into the Victorian Parliament.  When the Bill becomes law, it will remove the requirement to notify the Small Business Commissioner of new leases under section 25 of the Act. 

Under existing law, section 25 of the Act provides that within 14 days of a lease being signed by all parties or renewed (or within such other period as is agreed between the landlord and the Small Business Commissioner), the landlord must notify the Small Business Commissioner of:

1. the address of the premises;
2. the landlord's name, address and email address (if any) (and, if the landlord is a company, a contact name);
3. the tenant's name, address and email address (if any);
4. the date when the lease was signed by all of the parties to it, or renewed; 
5. the lease expiry date; and
6. if the lease contains an option, the date or period during which the option may be exercised.

The information collected must be maintained in a register by the Small Business Commissioner.  However, there is no particular purpose for the register: it is not searchable by members of the public nor is there any mechanism or requirement to update the register when leases terminate or if lease details change.  

Landlords who do not comply with the current notification requirement risk a fine of 10 penalty units (currently A$1,408.40) per offence.

The removal of the notification requirement has been endorsed by the Victorian Competition and Efficiency Commission, the Productivity Commission and reviews of the Office of the Small Business Commissioner.

The Minister for Innovation, Services and Small Business has estimated that the removal of the notification requirement will result is a total saving of A$700,000 per annum in compliance costs for Victorian retail landlords.  This estimate is calculated on the basis that each notification costs a landlord approximately A$50 to complete. 

The amendment bill will also address certain ambiguities in the Act.  It clarifies that obligations to provide a copy the proposed lease, prescribed information brochure and a disclosure statement, as well as the prohibition upon seeking or accepting key money, apply to prospective landlords as well as to landlords.

In brief:

• any person who offers or advertises premises for lease must provide: 
  • a copy of the proposed lease; and
  • a copy of a prescribed information brochure about retail leases, as soon as negotiations are entered into; and 

 

• the proposed tenant must have received a copy of the lease and a disclosure statement at least 7 days before the lease is entered into (21 days before the end of the current term if a lease is renewed pursuant to an option or, if a lease is renewed by agreement, no later than14 days after the agreement is made).
  

This is inline with current practice.

The prohibition upon landlords and prospective landlords requiring or accepting key money extends to money or any other benefit that a tenant gives for which there is no real consideration other than the grant of a lease or renewal or a consent to a variation or assignment or subletting.

The final amendment that will be effected by the Bill is the correction of a minor drafting error involving an unnecessary repetition of words in the current legislation.

The amendments to the Victorian retail legislation will come into force on the day after the Bill becomes law.  At this stage it is anticipated that the Bill will become law by the end of 2012.

We will issue a further alert once the Bill is passed and becomes law.

 

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