The Retail Leases Amendment (Review) Bill 2016 was introduced to Parliament on 8 November, 2016. Changes included in the Bill are:
- The minimum five-year term for retail shop leases will be removed. Currently in New South Wales, approximately 29% of leases have a term of less than 5 years and, 36% have a term of greater than 5 years, with tenants requiring a certificate from a lawyer or conveyancer to obtain the shorter lease. Removal of the restriction will save tenants the expense of obtaining the certificate.
- All contributions to the lessor’s outgoings must be stated in the disclosure statement if they are to be recoverable from the lessee. Lessees will now be entitled to compensation if the lease is terminated during the first 6 months for a lessor’s failure to give a disclosure statement or for giving an incomplete, false or misleading disclosure statement. Compensation will be available for costs reasonably incurred in entering into the lease, including fit-out of the premises.
- Certain leases which were previously covered by the Retail Leases Act will be excluded if they are used wholly for certain non-retail purposes, including private post boxes, signage display and certain storage uses.
- Bank guarantees must be returned to lessees within 2 months after the lessee has performed. This addresses concern of lessees who are often required to provide the bank with a personal guarantee and are vulnerable to the risk of the lessor drawing down bank guarantees when there has been no breach of the lease.
Further to the above, the monetary limit on the jurisdiction of the Civil and Administrative Tribunal for retail tenancy disputes will be raised from $400,000 to $750,000 and allow the Tribunal to order rectification of a retail shop lease or disclosure statement to correct a mistake, give effect to the intention of the parties or to reflect the actual disclosure of information between parties. This is particularly important where the landlord sells the premises or the tenant sells the business and the new party is not aware or does not consent to the original agreement.