The NSW Retail Leases Amendment (Review) Bill 2025 introduces modest but notable changes to retail leasing law. Robert Speirs unpacks the key updates — from disclosure and key money to relocation — and questions whether these reforms bring clarity or just more complexity.
The NSW Retail Leases Amendment (Review) Bill 2025 has been passed to the Legislative Council for review, ahead of proclamation.
The Bill twiddles the dials a bit, but if passed unamended it will amend the Retail Leases Act (RLA) in the following material respects. (There are a number of changes that are not commented on below).
- Objects
The Bill introduces a new section 2A which sets out the Objects of the Act.
Pausing here, does it seem a little odd that the RLA was enacted in 1994, and it is only now, some 30 years later, that we have worked out what its objects are? This looks to me to be an embarrassing admission that we have put the cart before the horse, but I suppose apologists might argue that it is a case of better late than never.
The RLA in Victoria contains a “main purpose” clause, which says that the main purpose of the Vic RLA is to provide a scheme to enhance “(a) the certainty and fairness of retail leasing arrangements….”. This has always made me laugh, because it would be hard to conceive more confusing and inequitable processes than those imposed under the Victorian Act.
In keeping with the long-standing tradition of dysfunctional harmonisation, NSW has ignored the Victorian formulation and set out its own, unique list of 6 anodyne objects. I will only address one of those objects, sub para (e) which records that an object of the Act is “to impose requirements that are appropriate to enable persons to enter retail shop leases regardless of the size of the person’s business”. (emphasis added)
Even if I could understand what that tokenistic statement means, it is clearly inconsistent with the express terms of the Act, since the size of a person’s business is one of the few grounds on which a person’s business is excluded from the operation of the Act: (section 5 excludes from the Act premises which have a size in excess of 1,000sqm).
- Exclusions from the Act
Section 5(d) has been replaced with a new (d), excluding certain premises from the operation of the Act. The Act now excludes:
“(d) premises used only for purposes prescribed by the regulations as excluded uses, unless the premises-
- are premises the use of which is ancillary to the operation of the retail shop that is the subject of a retail shop lease, and
(ii) the retail shop lease applies to the premises”.
This drafting requires some unravelling, and we are yet to see the regulations, but if we think about a storage cage, then:
(a) the use is ancillary to the operation of the shop that is subject to the retail shop lease; and
(b) if the use of the storage cage is included in the lease, then “the retail shop lease applies to the premises” (in this context, “the premises” is the storage cage) and the Act will apply to the cage.
This leaves open the possibility that the Act will apply, if the right to use the cage is included in the lease itself, and will not apply, if the retail shop lease does not include the cage, and the cage is provided to the tenant under a separate licence.
Do we really need this?
At the same time, section 79 has also been amended so that it now reads:
“This Act applies to a retail shop lease only to the extent the lease applies to:
(a) a retail shop; and
(b) premises the use of which is ancillary to the operation of the retail shop”.
If we read the first line and subpara (a) together, we are privileged to witness a masterpiece of circular drafting. It says: “This Act applies to a retail shop lease only to the extent the lease applies to a retail shop”. Magnificent.
- Copy lease at negotiation stage
Section 9 has been beefed up to impose penalties on landlords who fail to have a copy of the proposed lease available for inspection by the tenant.
- Disclosure statement
In a rare positive, s11 has been amended so that it is now possible to contract out of the mandatory 7 day disclosure statement quarantine before a lease can be entered into. A party is now entitled to reduce or waive the 7 day period by agreement in writing, if each party has engaged an Australian legal practitioner and sought the advice of the Australian legal practitioner about the reduction or waiver.
This is obviously a welcome development, because it enables the parties to be more dynamic in their approach. It also makes the Victorian system, with its inflexible 14 day twilight zone, seem all the more obsolete.
However, the drafting of the Bill has still got me scratching my head.
The concept behind s11 is that a landlord is required to provide the tenant with the statutory disclosure before the tenant can be required to commit to the lease. There is no doubt that the enactment has been designed for the benefit of the tenant. This is clear, because it is only the tenant who has rights in the case of a breach of the disclosure requirements.
I am therefore mystified as to why the right of the tenant to waive the 7 day right can only be engaged if the landlord (as well as the tenant) has sought legal advice about the waiver. Why is it necessary for the landlord to obtain legal advice about waiving a right the landlord does not have?
- Key money
Another sensible amendment has been made to s14, dealing with key money.
The provision has always permitted a landlord to charge reasonable fees in connection with an assignment. It is sometimes the case that the assignee will negotiate for a new lease, rather than take an assignment, particularly in cases where there is not much term left in the lease being assigned.
Section 14 will now permit a landlord to charge a reasonable fee for the cost of preparing the new lease.
- Pharmacies
Section 20 will be amended so that the turnover of a pharmacy business will be excluded from the definition of “turnover”.
- Relocation
Section 34A dealing with relocation has been fattened up to add further factors to be taken into account when determining the rent for the alternative shop.
- Notice at end of term
Section 44 dealing with notice the landlord is required to give the tenant at the end of the term has received a bit of a makeover.
- Housekeeping
There have been a number of housekeeping amendments.
In this sweep (as with previous sweeps), the review has failed to address the service of notice provision.
Section 81A(c) of the RLA provides that a notice served under the Act is sufficiently served, “in the case of a mortgagor in possession, if left at… any occupied house or building comprised in the mortgage”.
I have no idea how that provision relates to a retail shop lease, and yet there it is. It looks like the original drafter of the RLA just got tired towards the end of the Act, (who wouldn’t) and simply copied and pasted the service of notice provision from s170 of the Conveyancing Act, without thinking about whether or not it made sense. I am pretty sure that a mortgagor in possession of a house has nothing to do with a retail shop lease.
Section 81A also provides at subpara (d) that service is effective if delivered to the Document Exchange (DX). The DX is about as dated as Victoria’s approach to retail leasing. It stopped operating when email became a thing.
And at the same time there is no provision in s81A which talks to the ability to serve by email.
So, according to the RLA, I can serve a Disclosure Statement on the mortgagor in possession of a house by delivering it to a facility that doesn’t exist. But I can’t serve it by email.
If you were serious about a review of the Act you might have cleaned this up.
Summary
Despite the carping above, the Bill overall provides some improvement to the landscape, despite its poor execution and once-over-lightly approach.
It would obviously be better if we went at it with a chainsaw not a toothbrush, but while we are governed by politics not policy, you can forget about that.
- This article was first published in SCN magazine – Little Guns 2025 edition
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