Is my lease a retail lease?.

Many of our clients ask us ‘Is my lease a retail lease?’ The answer isn’t always straightforward, so to lend some clarity, here are some key points both landlords and tenants should note.

Acting up?

In Victoria, retail leases are governed by the Retail Leases Act 2003 (Vic) (Act) and the accompanying Retail Leases Regulations 2013 (Vic) (Regulations).

Under the Act, the general rule is that a retail lease arises when parties enter into a lease arrangement for a premises used wholly or predominantly for the retail sale or hire of goods or services for a term greater than 1 year.

Excuse me?

It is important to note however, that the Act also lists a number of exceptions to this general rule, including:

  1. premises which have occupancy costs more than $1,000,000 per annum (excludes GST);
  2. premises used wholly or predominantly for the carrying on of a business by a tenant on behalf of the landlord as the landlord’s employee or agent;
  3. where the tenant is a listed corporation or a subsidiary of a listed corporation (as defined in section 9 of the Corporations Act 2001 (Cth));
  4. where the tenant is a body corporate whose securities are listed on a stock exchange, outside Australia and the external territories, that is a member of the World Federation of Exchanges or is a subsidiary of such a body corporate; or
  5. where the Minister determines a certain type of business, premises, tenant or lease should be exempt.

And the Minister says…

Any determination made by the Minster is published in the Government Gazette. To date there have been 7 determinations published but only 6 still remain effective. You can access these determinations at http://www.gazette.vic.gov.au/.

In general terms some of these Ministerial determinations exempt:

  1. premises in a multi–story building (excluding premises in a shopping centre):
    (a)  located entirely on a basement level or higher than the second floor; and
    (b)  used wholly or predominantly for the provision of services;
  2. premises which are leased or subleased by Barristers’ Chambers Limited to a legal practitioner who has been issued with a practising certificate by the Victorian Bar;
  3. premises located entirely within the Melbourne Markets; and
  4. a tenant who is a body corporate whose securities are listed on the New Zealand Stock Exchange Limited or a subsidiary of such a body corporate.

On 13 October 2014 a new determination excluding premises leased for certain community and charitable purposes, subject to a maximum annual rental, was made. This determination will apply to leases entered into after 1 January 2015, revoking a determination made in 2008 relating to local council premises leased for certain community and charitable purposes.

Still confused?

As highlighted, various factors can determine whether a lease attracts protection under the Act. If you are still uncertain be sure to speak to one of our property lawyers to gain some clear advice on whether your lease is in fact a retail lease.

 

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Categories:
Property

Posted on: 20 July 2016