New Disclosure Statements under the Retail Leases Act to be issued by Landlords

Landlords should be aware of the recent changes to the Retail Leases Regulations 2013 (Vic) (Regulations) which change the form of Disclosure Statements to be issued when a Lease or Renewal of Lease is issued by a Landlord.  These changes apply to all Leases which fall within the Retail Leases Act 2003 (the Act).

On 1 December 2022 the Retail Leases Amendment Regulations 2022 (Vic) (2022 Amendments) commenced.  The 2022 Amendments update the form of disclosure statements to be issued pursuant to the Regulations, with the changes reflecting amendments made by the Retail Leases Amendment Act 2020 (Vic) (2020 Amendments).

Our previous insight on the 2020 Amendments can be accessed here.

Time lines for issuing Disclosure Statements

Landlords should be aware of the following time lines for issuing Disclosure Statements in accordance with the 2020 Amendments to the Act:

1. Signing a new lease

Landlords must provide prospective tenants with a copy of the proposed lease agreement and accompanying disclosure statement at least 14 days before the lease is signed.

If a landlord fails to provide these documents within the required timeframe, the lease will not be taken to have commenced until the date that is 14 days after the documents have been given to the tenant.

If a tenant enters into a Lease under the Act without being provided with the prescribed disclosure statement, the tenant will be entitled to withhold rent until the disclosure statement is provided; and may be entitled to terminate the lease, subject to the time frames in the Act.

2. Exercising an option to renew a lease

Landlords must provide a tenant who exercises an option or is entitled to exercise an option to renew a retail premises lease with a disclosure statement at least 21 days before the end of the current term of the lease.

3. Agreement to renew a lease 

Alternatively, if a Landlord and Tenant enter into an agreement to renew a lease (rather than a Tenant exercising an option to renew a Lease in accordance with the original Lease), a Landlord must provide the tenant with a disclosure statement within 14 days of the parties of entering into this agreement.

New form of Disclosure Statement

The prescribed form of disclosure statements required to be issued under the Act for new leases and renewals of lease have been updated by the 2022 Amendments.  The main changes are:

1. Disclosure Statements for new Leases 

Both the ‘Schedule 1 – Landlord’s Disclosure Statement – Retail Premises not located in Retail Shopping Centres’ and ‘Schedule 2 – Landlord’s Disclosure Statement – retail premises located in Shopping Centre‘ now confirm the obligation of the landlord to provide a copy of the prescribed disclosure statement and the proposed lease to the tenant at least 14 days before the signing of the new lease.

The prescribed disclosure statements have also been updated to include notes referencing the landlord’s liability for capital costs under section 41 of the Act and maintenance and repair obligations under section 52 of the Act, specifically in relation to the outgoings estimates provided for “Air conditioning/temperature control” and “Repairs”.

2. Disclosure statement on renewal of lease

The ‘Schedule 3 – Landlord’s disclosure statement on renewal of lease’ now requires the landlord to provide details of any changes from the previous disclosure statement to the tenant in relation to:

• • Item 1: renewal of the lease;
  • Item 2: alteration or demolition works, planned or known to the landlord, to the premises or building/centre, including surrounding roads, during the term or any further term or terms;
  • Item 3: other matters which may materially affect the tenant’s ongoing business which are not referred to in the lease and alteration or demolition works, planned or known to the landlord, to land adjacent to or in close proximity to the premises or building/centre, during the term or any further term or terms; and
  • Item 4: any other costs arising under the renewed lease not including costs that are referred to in the statement of outgoings under section 47 of the Act and are not referred to in the lease.

The 2022 Amendments do not amend the ‘Schedule 4 –  Disclosure statement – assigned lease where ongoing business’ which is required to be issued by a current tenant to a proposed assignee upon an assignment of lease.

Reminders

The 2022 Amendments serve as a reminder to landlords of the time lines for issuing disclosure statements to retail tenants.  Landlords should ensure that disclosure statements issued on or after 1 December 2022 are in the new prescribed form to ensure they comply with the changes made by the 2022 Amendments.

If you require advice in relation to any changes to your obligations under the Retail Leases Act or any leasing matters, our experienced commercial team are available to provide advice in relation to your obligations and rights.