Entering into a retail lease is a significant step for both landlords and tenants. To promote transparency and fair dealing, both Victoria and New South Wales impose strict disclosure obligations on landlords under their respective Retail Leases Acts.
Failing to comply can lead to delayed lease commencement, termination rights for tenants, compensation claims, or even penalties. Here’s what landlords need to get right to avoid costly missteps.
Why Disclosure Matters
Disclosure obligations are designed to ensure tenants understand the key terms of the lease and all associated costs before committing. The Lessor’s Disclosure Statement is a statutory document produced by a landlord summarising key commercial terms, including rent, rent review mechanisms, outgoings, repair responsibilities, and any redevelopment plans.
In both Victoria (Retail Leases Act 2003) and NSW (Retail Leases Act 1994), disclosure is mandatory for most retail premises leases, and non-compliance can delay the start of the lease, render lease terms unenforceable or allow a tenant to terminate the lease.
What Must Be Disclosed?
In both states, the disclosure statement must include the following key items (amongst other things):
- Start date and duration of the lease, and any option terms
- Rent amount, review method (e.g. market, CPI, fixed), and review dates
- Details of the permitted use
- Details of all outgoings and costs that the tenant will be required to pay
- Any fit-out obligations or capital works
- Details of proposed alteration works
- Details of the essential safety measures costs (especially in Victoria)
- Whether the lease is to be registered (particularly relevant in NSW)
Common Mistakes for Landlords
1. Late disclosure (Victoria)
In Victoria, failing to provide the disclosure statement causes delays as the commencement date is pushed back until 14 days after disclosure is provided. If the tenant has already entered into the lease, it can serve a notice of non-disclosure on the landlord within 90 days. It then does not have to pay rent from the date of the notice until it receives the disclosure statement. It may then terminate within 7 days of receiving the statement.
2. Late disclosure (NSW)
In NSW, late or incomplete disclosure may expose landlords to termination within the first 6 months of the lease.
3. Incomplete outgoings disclosure
If a cost isn’t disclosed, the tenant may not be liable for it. This includes often overlooked items like ESMs (essential safety measures), marketing levies, or management fees. Responsibility to contribute to the fit-out of the premises must also be included.
4. Not disclosing on renewal
If a tenant exercises an option to renew in Victoria, the landlord must (at least 21 days before the end of the current term) provide a disclosure statement setting out any changes to the previous statement. In NSW, disclosure on renewal is only required if specified in the lease.
5. Using outdated forms
Each state prescribes the form of disclosure. While a disclosure statement doesn’t have to look exactly like the form, it must contain all of the prescribed information. It’s best to follow the form closely.
Practical Tips for Landlords
- Start early: Prepare the disclosure statement well before lease negotiations conclude
- Use correct forms: Always refer to the latest prescribed disclosure form
- Keep records: Document the date the disclosure statement is provided and obtain written acknowledgement from the tenant
- Review annually: Ensure all outgoings and obligations are current and supported by updated statements
- Professional advice: Engage a commercial leasing lawyer to review the lease and disclosure documentation
Not Just Ticking a Box
Retail lease disclosure is not a box-ticking exercise — it’s a legal obligation that, if mishandled, can seriously undermine a lease agreement.
By understanding and complying with disclosure requirements, landlords can reduce legal risks, foster stronger landlord-tenant relationships, and protect the enforceability of their retail leases.
Need assistance with your retail lease documentation?
Our team specialises in commercial and retail leasing and can help ensure your leases are compliant, enforceable, and tailored to your business needs.
The information on our website is general and is not legal advice. We put lots of work into making our content insightful, but it may not apply to your circumstances. We’re more than happy to help with your issues – just reach out.