Retail Leasing Changes: What Tenants and Landlords Must Know
Recent changes to the Retail Leases Act mean both tenants and landlords could be caught out by outdated Section 28 notices.
If you're a tenant, you could delay locking in a new lease — or end up paying more than expected.
If you're a landlord, you could lose control over your rental income.
Watch my latest video to learn more.
At Millens, we make sure your leasing documents are fully compliant and your interests protected.
Got a question about exercising an option or issuing a notice? Contact us — we’re here to help.
VIDEO TRANSCRIPT
Ross Millen:
There was a problem for tenants a couple of years ago in that when it came time to exercise your option, you could exercise your option, but let's say the commencing rent under the new term was a market review; so you didn't know what the market rent was going to be when you exercised your option. It was a bit like putting the cart in front of the horse. So you could exercise your option and then you'd be up for a much higher rent than you anticipated.
So as far as retail leases go, this was resolved by some amendments to the Retail Leases Act, Section 28. And Section 28 said that the landlord had to give a notice to the landlord's tenant, telling them about their option and giving them the opportunity to have an early rent review so that they knew what rent they were going to be paying before they actually exercised the option.
Now, Section 28 was changed; there's some amendments. And what I've noticed, both acting for landlords and also acting for tenants, is some agents and landlords are sending a notice that's in the old form. It doesn't satisfy the new requirements. It doesn't have all the information that the tenant requires.
Well, what's the effect of that? It means that the tenants option keeps continuing. So the tenant can just sit back and wait and wait and wait and wait and still pay rent at the old rate, not have to worry about the market review because their option remains on foot. So this can be a problem for landlords, and also it's uncertain for tenants.
So if you have any doubts about what to do on exercising an option in a retail lease, whether it's the landlord or the tenant, we know how to draft those Section 28 notices properly and to make sure they comply with the Act. So if you've got any queries about your lease or exercising an option to renew or giving the right sort of notice, contact me or anyone else at Millens. We're here to help you with your leasing problems.
