Leasing a Retail Premises

If you've decided to lease rather than buy your premises, the best place to start is the Victorian Small Business Commissioner (VSBC). See External Links to the right. The VSBC is there to help both tenants and landlords.

If you're entering into a new lease for the first time, read these FAQs before you sign:

Topics on this page include:

• Does the Retail Leases Act apply to my business premises?
• What conditions are negotiated before a retail lease is signed?
• For a new retail lease, what must the landlord give to the tenant?
• Does a retail lease have a minimum term you must agree to?
• In a retail lease, who is responsible for maintenance and repairs?
• After a retail lease has been signed, what are the main ongoing issues?

Does the Retail Leases Act apply to my business premises?

As defined by the Retail Leases Act 2003, retail premises are premises which are wholly or mainly used for selling or hiring goods or services to the public. If your premises is mainly used for wholesaling, manufacturing or storage, it is not a retail premises and the Retail Leases Act does not apply to you. If a minor part of your business involves some retail sales, or if you’re not sure for any other reason, get this clarified by ringing the Office of the Victorian Small Business Commissioner on 13 22 15.

What conditions are negotiated before a retail lease is signed?

Retail leases are not a case of ‘one size fits all’. They are negotiable. Before you sign anything, you should negotiate with your landlord and agree to all the conditions of the lease. Conditions to be negotiated usually include:

• the term of the lease and options to renew
• rental payments, reviews and increases
• permitted use of the premises and facilities
• operating expenses that will be shared
• conditions for reassignment of the lease
• rights and responsibilities of both tenant and landlord
  

For a new retail lease, what must the landlord give to the tenant?

For a new lease, the landlord is legally required to give the tenant:

• the proposed lease as soon as the lease negotiations start
• a disclosure statement which includes an estimate of outgoings (additional operating expenses e.g. rates) at least seven days before signing the lease
• the Victorian Small Business Commissioner Information Brochure as soon as the lease negotiations start

After the lease has been signed the landlord must also give the tenant a copy (or photocopy) of the signed lease within 28 days.

Does a retail lease have a minimum term you must agree to?

In Victoria, the standard minimum term for a retail lease is five years. However, if you don’t want to be locked in for a five year term (and your landlord is agreeable), you can apply to the Victorian Small Business Commissioner (VSBC) to waive (remove) the five years. Go to the VSBC website, download the 5 year waiver certificate and return the completed form to the VSBC. A VSBC officer will contact you, explain how the waiver works and give you a certificate within 21 days. The certificate can also be completed and submitted online.

In a retail lease, who is responsible for maintenance and repairs?

According to the Retail Leases Act 2003, the landlord is responsible for keeping the premises in the same condition as when the lease begins. This includes:

• structure of the premises and fixtures
• plant or equipment in the premises
• appliances, fixtures or fittings related to services e.g. gas, electricity, water, drainage

The tenant is generally responsible for keeping the premises clean and in good order, subject to ‘fair wear and tear’. As an example, a common condition of a retail lease is that the tenant will pay for the carpet to be steam cleaned every year. But when the carpet cannot be cleaned because of its age, the landlord will pay to replace it with new carpet.

After a retail lease has been signed, what are the main ongoing issues?

Once you have successfully managed the negotiation and signing stages of your retail lease, there could also be ongoing issues. These include:

• the legal guidelines to be followed if the rent is to be increased
• the legal process to be followed to get your lease renewed
• using the Victorian Small Business Commissioner to resolve a leasing dispute
• your obligations if you want to terminate before the end of a lease
• your obligations if you want to assign the lease to a new tenant
  

Get complete answers to all your leasing questions

The following step-by-step guide, information sheet and retail agreement checklist will help you understand your rights and obligations when signing a retail lease.

	Setting up and running a retail premises (PDF 154Kb)
	Your guide to: buying or leasing a retail premises; rights and responsibilities for tenants and landlords; pre-lease documents; the term of a lease and increases in rent; planning and building permits; and dispute resolution.

	Retail Lease Agreement Checklist (PDF 76Kb)
	Questions you should ask, and questions you may be asked, before signing a lease.

Get the VSBC Information Brochure

The Retail Leases Act Information Brochure can be downloaded from the VSBC website. It outlines the correct procedures for retail leasing, and has a checklist of what must be done before and after a lease is signed. See External Links to the right.

Get the VSBC 5 year waiver certificate

If you don't want to be locked in for the normal five year minimum term (and your landlord is agreeable), download the 5 year waiver certificate from the VSBC website. It can also be completed and submitted online. See External Links to the right.

Investigate before you lease

Before you get to the negotiation stage, you should investigate any property you're thinking of leasing. Will you need a planning or building permit? Which planning zones and overlays apply to that property, and will they affect your plans for the business?

When considering a property, get a free Basic Property Report and check which planning zones and overlays apply. Then go to Planning Schemes Online, and enter the name of the local council to find more detailed information. See External Links to the right.