Australia: New Bill amends the Retail Shop Leases Act 1994: What does it mean for landlords and tenants?

The Queensland government has passed a Bill that amends the Retail Shop Leases Act 1994 (Qld) (Act). The amendments commenced on 4 April 2011 and they have significant implications for both landlords and tenants.

The new laws do not operate retrospectively and will only apply to leases entered into on or after 4 April 2011.

Restriction on lease rent review methods – no more ratchet clauses

Under the new laws, all Consumer Price Index or market rent review clauses must allow the rent to decrease.  Any clause that prevents the decrease of rent or limits or specifies the amount by which the rent may decrease, will be prohibited.

Some leases contain a clause providing that if there is a market review, the rent will be the higher of the market rent and the rent payable by the lessee for the previous year. Under the new laws, this will not be allowed.

Compensation payable by a landlord to an assignee of a lease for false or misleading statements

The law previously made a landlord liable to pay compensation if a false or misleading statement or misrepresentation made to a tenant caused the tenant loss or damage.  This has been extended so that compensation will also be payable by a landlord to an assignee of a lease for a false or misleading statement or representation that causes loss or damage.

If the parties cannot agree on the amount of compensation payable then it will be decided by way of the dispute resolution process in the Act. Any clause in a lease that limits the amount of compensation payable is prohibited.

If you would like to discuss this legal alert in more detail, please contact a member of our team on 07 3231 2444.

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