In Victoria, there are two sub-sets of commercial leases; retail leases and non-retail leases. Whilst in some circumstances it will be clear as to whether or not a commercial lease is a retail lease or a non-retail lease, this is not always the case.
What is a Retail Lease?
Retail leases in Victoria are subject to the provisions of the Retail Leases Act 2003 (Vic) (the RLA).
The RLA provides certain rights and obligations for both landlords and tenants.
The RLA provides that a retail premises is a premises that is to be used for the sale or hire of goods by retail or the retail provision of services.
Please note that in order to qualify, the premises must be used wholly or predominantly for these purposes
What is not a Retail Lease?
The RLA is also quite clear on what is not a retail premises.
Examples of premises that are not retail premises include the following premises:
- Where the occupancy costs (e.g. rent, outgoings, any other costs) to the tenant under the lease is more than $1,000,000 excl GST per year;
- Where the tenant is a listed corporation in Australia or a subsidiary of such a corporation;
- Where the tenant is a body corporate whose securities are listed on a stock exchange, outside Australia or a subsidiary of such a body corporate;
- Where the premises are used wholly or predominantly to carry on a specified business that the Minister determines is a business to which the RLA doesn’t apply.
Please see here for a more exhaustive list.
Are there any Exceptions when the RLA Will Not Apply?
Currently (at the date of writing), there are seven (7) ministerial directions in force where the Minister has decided the RLA does not apply. These are:
- Premises located in a multi-story building (other than those located on the first three floors) and used for the provision of retail services.
- Premises used for a barrister’s chambers.
- Leases that have a term of 15 years or more where a tenant is required by the lease to carry out substantial works, or pay for substantial works to be carried out.
- Premises located entirely within the Melbourne Markets.
- Certain charitable and community purposes leases, where the rent is $10,000 per year or less.
- Where the tenant(s) are bodies corporate, companies or corporations whose securities are listed on a stock exchange outside of Australia.
- Premises used wholly or predominately for commercial gain through agricultural, farming, grazing or other similar activities.
Need Help With All Types of Commercial Leases?
If you think that one of the above ministerial determinations may apply to your lease, you must ensure that you carefully read the terms of the relevant determination as certain exceptions apply.
Whilst this article outlines a snapshot of the law regarding what constitutes a retail lease in Victoria, there is also extensive case law on the issue, which could affect whether or not a commercial lease is truly a retail or non-retail lease.
Our property lawyers here at Rosendorff are certified experts with knowledge and experience in this subject matter. We will be more than happy to assist you in determining whether your lease is a retail or non-retail lease.
