Retail Leases Act 1994 (NSW) explained
The Retail Leases Act 1994 (NSW) is the New South Wales law that governs retail shop leases. It applies to shops used wholly or mainly for a retail business listed in the Act, and to most shops in a retail shopping centre. It sets rules the lease can’t override, including disclosure statements, limits on the costs a lessor can pass on, security bonds and how disputes are resolved.
Which leases the Act covers
The Act applies to a lease of a retail shop. A retail shop is premises that are:
- used wholly or mainly for a business listed in Schedule 1 of the Act, or
- located in a retail shopping centre.
The list in Schedule 1 is broad. It covers most shops selling goods to the public, food and drink outlets, and many personal and household services.
Some leases are excluded even if the business is retail. The main exclusions are:
- shops with a lettable area of 1,000 square metres or more
- shops used wholly or mainly for a business carried on on behalf of the lessor
- leases for less than 6 months (with some exceptions) or for 25 years or more
If you’re not sure whether your lease is retail, see commercial lease vs retail lease.
The Act uses “lessor” for the landlord and “lessee” for the tenant. This guide does the same.
Rules before the lease is signed
| Rule | What it means |
|---|---|
| Lessor’s disclosure statement | The lessor must give the lessee a disclosure statement and a copy of the proposed lease at least 7 days before the lease is entered into. |
| Lessee’s disclosure statement | The lessee gives the lessor their own signed disclosure statement within 7 days after receiving the lessor’s, or a longer period they agree. |
| Lessor’s legal costs | The lessee generally can’t be charged the lessor’s legal costs of preparing or negotiating the lease. |
If the lessor doesn’t give the disclosure statement on time, or it is materially false, misleading or incomplete, the lessee may be able to end the lease within a limited period after entering it, or claim compensation.
Rules during the lease
- Outgoings. The lessee only pays the outgoings the lease and disclosure statement set out. The lessor must give an estimate in advance and an annual statement of what was spent.
- Rent reviews. A clause that stops the rent going down on a market review has no effect. If market rent can’t be agreed, a valuer can be appointed to decide it.
- Security bonds. A cash bond must be lodged with NSW Fair Trading within 20 business days, not kept by the lessor. See retail bond in NSW explained.
- Registration. If the term, including options, is more than 3 years, or the parties agreed to register, the lessor must lodge the lease for registration within 3 months after the lessee returns it signed. See the 3-month lease registration deadline in NSW.
- Assignment. The lessor can only refuse consent to an assignment on the grounds the Act allows, and must respond within the time the Act sets.
- Interference with trading. If the lessor’s actions substantially disrupt the lessee’s business, the lessee may be entitled to compensation.
These rules apply even if the lease says something different. A lease prepared for another state, or an older template, often doesn’t reflect them.
Signing or offering a retail shop lease in NSW? We act for lessors and lessees under the Act, online. Retail leases in NSW.
How disputes are handled
Most retail lease disputes in NSW must go to mediation through the NSW Small Business Commissioner before they can go to a tribunal or court. Mediation is a meeting with a neutral mediator where both sides try to reach an agreement.
If mediation doesn’t resolve the dispute, it can go to the NSW Civil and Administrative Tribunal (NCAT). NCAT hears most retail tenancy claims, including disputes about rent, outgoings, bonds, make good and the lessor’s conduct.
Disputes about bonds also involve NSW Fair Trading, which holds the bond until it is released by agreement or by order.
How NSW compares
The NSW, Queensland and Victorian Acts share the same basic ideas: disclosure before signing, limits on costs and a mediation-first approach to disputes. The details differ, including the disclosure period, the size and cost thresholds and whether there is a minimum term. NSW has no minimum term for leases entered into from 1 July 2017.
What this means if you’re about to sign
If you’re a lessee, check you have the disclosure statement and that 7 days have passed before you sign. Read the statement against the lease, and check the bond, outgoings and options.
If you’re a lessor, give the disclosure statement and lease early, keep a record of when they were given, lodge any cash bond with NSW Fair Trading, and diary the registration deadline if the lease needs registering.
Questions
Something else? Enquire online or email us.
Can the lease say the Act doesn't apply?
No. If the lease is a retail shop lease, the Act applies whatever the lease says, and terms that conflict with it generally have no effect.
Does the Act apply to an office in a shopping centre?
It can. The Act covers most shops in a retail shopping centre, not only those used for a listed retail business. Check the use, the location and the exclusions.
Who handles retail lease disputes in NSW?
Most disputes go to mediation through the NSW Small Business Commissioner first. If mediation doesn't resolve them, they can go to the NSW Civil and Administrative Tribunal (NCAT).
Leasing a retail shop in NSW?
We act for lessors and lessees under the Retail Leases Act 1994, online and on fixed fees. Send us your lease and tell us where you are up to.
Sources
General information only, not legal advice. Every lease is different, so get advice on yours before you sign.