A retail shop lease is distinguished from a commercial lease. Such leases are governed by the Retail Shop Leases Act (Qld) 1994 (“The Act”). The purpose of the Act is to help balance the rights and obligations between the landlord and tenant.

Under the authority of an Act. The landlord may limit the amount of compensation payable to the tenant in limited circumstances.

What is a Retail Shop Lease?

In Queensland, a lease qualifies as a retail shop lease if:

1. The tenant business is located in a Retail Shopping Centre; or
2. The tenant business is used wholly or predominantly for the carrying on as a Retail Business.

Retail Shopping Centre Definition

A Retail Shopping Centre is defined under s5D of the Act as a cluster of premises that have all of the following attributes:

• 5 or more of the businesses are used wholly or predominantly for carrying on retail businesses; AND
• All of the premises:
• Owned by 1 person; or
• Have 1 lessor or head lessor, or if the premises were leased, would have 1 lessor head lessor; OR
• Comprise lots within a single community titles scheme under the Body Corporate and Community Management Act 1997; AND
• All the premises are located in:
•  1 building; or
•  1 or more buildings if:
•  The buildings are adjoining; or
•  If the buildings are owned by 1 person, the buildings are separated by common areas or other areas owned by the owner or road; or
• If the premises are not owned by 1 person, the buildings are separated by common areas or a road.
  
• The cluster of premises is promoted or generally regarded, as constituting a shopping centre shopping mall, shopping court, or shopping arcade.

Retail Business Definition

A business that is considered as wholly or predominantly carrying on a retail business is defined under section 5c of the Act, which refers to Schedule 1 of the Retail Shop Leases Regulation 2016 (Qld).

Schedule 1 lists out various types of business that fall within the definition of a retail business. The list is quite extensive and tenants should refer to the Schedule to determine whether their business falls within any of the categories.

Specific exclusions apply pursuant to s5A of the Retail Shop Leases Act

Some exclusions apply pursuant to s5A of the Act whereby some retails businesses are not considered as retail shop leases. These include lease premises which:

• have a floor area of more than 1000m2;
• are located on a level of a multi-story building, or a standalone build where 25% or less of the total area is retail. For instance, non-retail premises located on a floor of a shopping centre is not a retail shop if 75% of the total lettable area of the floor is used for commercial or professional offices;
• are for a vending machine;
• are for an advertisement display;
• are for a piece of information, entertainment, community, or leisure facility;
• are for telecommunication equipment;
• are for an automatic teller machine;
• are for storage; or
• are for parking.

Benefits and Protections for Tenants

The Act provides various benefits and protections to the tenant at a higher level than other commercial leases. Accordingly, it is important that a tenant becomes familiar with the relevant provisions of the legislation.

These benefits and protections include the following:

• The landlord is restricted on the proportion of outgoings it can require the tenant to pay;
• The landlord cannot charge land tax on to the tenant;
• The landlord cannot pass its costs of preparing the lease on to the tenant;
• The landlord is restricted on the way rent review mechanisms are carried out.

Disclosure Statement by the Lessor

Further protection provided to the tenant is that the landlord is required to provide a disclosure statement to the prospective tenant prior to the tenant signing the lease.

The Lessor Disclosure Statement must contain information in relation to the prospective lease such as key lease terms, details of the premises, details of outgoings, and other relevant costs associated with the lease.

This statement must be provided at least seven (7) days prior to the tenant entering into the retail shop lease. 

If the lessor disclosure statement is incomplete, contains false or misleading information, or is not provided within the above timeframe.

The tenant may give written notice to terminate the lease within six (6) months after the date of the lease.

It is important to note that the tenant may be able to seek compensation for any damages suffered if the tenant enters into a lease based on incomplete, false, or misleading information contained in a lessor disclosure statement.

Other disclosure and reports to be provided under the Act

Under the Act, the tenant is also required to provide the following documents prior to signing the prospective lease to the landlord:

• a lessee disclosure statement containing information about the tenant’s business circumstances; and
• a legal advice report as well as a financial advice report (the tenant has less than 5 retail leases).

Conclusion

Overall, parties should not enter into retail shop leases without knowledge of the legislative requirements and consequences for failing to comply with

the relevant provisions.

Such provisions cannot be contracted out of and accordingly must be strictly followed. If you need extra support with your retail shop lease, please contact us.