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Changes to the Queensland Retail Shop Lease Act

October 20, 2016

Amendments to the Queensland Retail Shop Lease Act 1994 (Qld) made earlier this year in May are due to come into effect from the 25th November 2016. The Queensland legislation sets mandatory minimum standards for retail shop leases in the state.

Among other things, amendments to the Act will alter the definition of when a when a lease is entered into for clarity and will limit the scope of the act to exclude:

  • Retail shops with a floor area greater than 1000 square meters;
  • Leases where the tenant is an employee or agent of the landlord; and
  • Leases for a non-retail business purpose located in, or in a building that is part of a retail shopping centre, where less than 25% of the lettable area is used for retail business purposes.

Other changes include clarification of the pre-lease disclose requirements by:

  • Allowing non-major lessees to waive disclosure periods and simplifying waiver for major lessees;
  • A new process for pre-lease disclosure to be passed onto sub-lessees and franchisees;
  • A new obligation on a landlord to give a current lessor disclosure statement to a siting tenant who exercises an option to renew their lease; and
  • A new obligation on an assignor to give an assignee a disclosure statement and a copy of the current lease before entering into a contract for the sale of a business.

The amendments will also alter requirements for tenants to provide turnover certificates and turnover statements where the tenant’s rent is calculated partly or wholly as a percentage of business turnover.

There will also be significant change to provisions dealing with landlord outgoings and payments for promotions and advertising. Key among these are:

  • New requirements for the landlord to include a breakdown of estimated fees to be paid by the tenant for administration costs of running the centre;
  • The landlord’s audited annual statement must now outline the total management fees paid by the tenant;
  • Tenants may withhold payment of landlord outgoings until the outgoings estimate or audited annual statement is provided by the landlord;

Where a tenant must make payments to their landlord for promotions and advertising, the landlord must now provide a marketing plan detailing proposed promotion spend for the period. Likewise, a landlord is now obliged to carry forward any unspent promotional amounts and make available an audited annual statement of the landlord’s expenditure on promotional amounts.

In addition to this, the amendments seek to update and clarify provisions dealing with implied compensation, liability for costs associated with a lease, implied relocation and demolition provisions, refurbishment and refitting of a shop and the release of an assignor and the assignor’s guarantor from some liability under the lease.

Importantly, the amendments will alter provisions of the act which void a part of a retail shop lease requiring a tenant to open for trade outside the core trading hours for the shopping centre. This

amendment will clarify this section to make a provision in a lease which permits, rather than requires, a store to be open outside core trading hours, not void under the Act.

Further information about the recent amendments can be found on the Queensland Government business portal here. To discuss how the changes to the law might affect your business call 1800 RETAIL (738 245) to speak with one of our leasing and tenancy consultants.

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