FAQ
A lease is a legally binding agreement between a landlord and a tenant granting the tenant exclusive possession of premises for a fixed term in exchange for rent. In Victoria, commercial and retail leases are governed by the Retail Leases Act 2003 (Vic) (for retail premises) and general contract and property law principles (for non-retail commercial premises). Before signing any lease, it is strongly recommended that you obtain independent legal advice from a commercial lease lawyer in Victoria.
The Retail Leases Act 2003 (Vic) applies to leases of premises used wholly or predominantly for the retail sale or hire of goods, the retail provision of services, or a business type specified by the Minister. Section 4 of the Act defines retail premises. The Victorian Small Business Commission (VSBC) provides detailed guidance on what qualifies as retail premises in Victoria.
The Retail Leases Act 2003 (Vic) provides important protections for retail tenants in Victoria, including: a landlord cannot pass on legal costs for preparing the lease to the tenant (section 51); tenants have a right to a minimum 5-year term (section 21); and a landlord must consent to a tenant’s request for assignment of the lease except in limited circumstances (section 60). Disputes under the Act are handled by the Victorian Small Business Commission.
Certain leases are exempt from the Retail Leases Act 2003 (Vic), including: local council premises used for public or municipal purposes; premises with occupancy costs exceeding $1,000,000 per year; premises where the tenant is a listed corporation or subsidiary; premises above the first three storeys of a building used for retail; and leases of 15 years or longer that impose substantial obligations on the tenant. The Minister for Small Business may exempt further categories by order.
A disclosure statement is a mandatory document a landlord must provide to a prospective retail tenant before a lease is entered into, renewed, or assigned, under section 17 of the Retail Leases Act 2003 (Vic). It sets out key lease terms in plain language including rent, outgoings, permitted use, and incentives. Failing to provide a disclosure statement, or providing a misleading one, entitles the tenant to terminate the lease in certain circumstances. The Victorian Small Business Commission provides approved disclosure statement forms.
Retail and commercial leases in Victoria typically provide for periodic rent reviews. Permitted methods include CPI (Consumer Price Index) adjustments, fixed percentage increases, or market rent reviews (where rent is reset to current market rates). Under the Retail Leases Act 2003 (Vic), ratchet clauses preventing rent from decreasing on a market review are prohibited for retail leases. Disputes about market rent reviews can be referred to the Victorian Small Business Commission for mediation or to an independent valuer.
Outgoings are the operating costs of a property that a landlord may pass on to the tenant, such as council rates, water rates, building insurance, land tax, and common area maintenance. Under section 41 of the Retail Leases Act 2003 (Vic), landlords cannot pass on land tax liability to retail tenants. The lease must specify which outgoings the tenant bears, and the landlord must provide an annual estimate and reconciliation. If you are unsure what outgoings you are agreeing to pay, we recommend having a commercial lease lawyer in Victoria review the lease before you sign.
If a landlord sells the leased property in Victoria, the lease remains binding on the purchaser. You cannot be required to vacate because the property has changed hands. Under the Transfer of Land Act 1958 (Vic), a registered lease binds the land and any subsequent owner. It is important that your retail or commercial lease is registered on title at Land Use Victoria to protect your interests against a sale or mortgage. If your lease is unregistered, contact a commercial lease lawyer in Victoria to discuss your options.