Proposed changes to Retail Leases Act 1994 (NSW)

It is proposed to change the Retail Leases Act 1994 (NSW) (Act).

The changes would be made by way of the passing of the Retail Leases Regulation 2022 (Draft Regulation).

 What is the current status?

 The Draft Regulation is currently out for public consultation.

 When is this proposed to commence?

 1 January 2023.

 What are the main changes?

1. Inclusion in Schedule 1 of the Act of further retail businesses. The leases for these businesses will then be governed by the provisions of the Act.
2. The businesses to be included are small bars, and businesses in the health and fitness industries, such as gyms and yoga studios.
3. The Draft Regulation provides that the mediation of disputes provisions under the Act will apply to new retail shops, even if the leases were entered into before the regulation commences.

Why have these changes occurred?

1. During the pandemic, the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (and successors) (COVID Regulation) provided for mediation for certain retail and commercial leases. During this time, the NSW Government noted that many commercial leases not governed by the Act were carrying out mediations under the COVID Regulation, including those hardest hit by lockdowns in the health and fitness and hospitality sectors.
2. With new businesses and services emerging in the health and fitness industries which are more aligned to retail consumers, and the blurring of the line between what constitutes a small bar as compared with a restaurant, the NSW Government considered it appropriate that Schedule 1 businesses reflect this.  As the Draft Regulation has not yet been finalised, the type of businesses to actually be added to Schedule 1 may change.
3. To give such business owners access to the provisions of the Act, including:

• mandatory dispute regime under the Act; and
• greater certainty and transparency in decision making in relation to leasing costs during lease negotiations through the pre-lease disclosure provisions in the Act.

Broader Review of Act

The NSW Government has also sought public comment on a broader review of the Act.  This is part of the review regime mandated under the Act.  The last review was completed in 2017.

Authored By:

John Nicolas, Partner
Sally Tuckfield, Partner