Amendments to the Retail Leases Act 2003 (Vic) that came into effect in late 2020 delivered changes to time frames and requirements for the provision of proposed lease and disclosure documents and refund of security deposits to tenants, and introduced an early market rent review process for tenants.
During negotiations for a new lease and upon the renewal of an existing lease landlords must now notify tenants of any changes made to a proposed lease, no matter how insubstantial. Penalties apply for the failure to notify of any such changes.
Landlords must provide a copy of the proposed lease (in its final form) and disclosure statement at least 14 days (increased from 7 days) before the commencement of the new lease. The lease will not commence until 14 days after completed documents have been provided to the tenant.
Landlords must now give tenants 3 months written notice prior to the last date that an option for renewal under the lease can be exercised. The notice must include:
* the date by which the option must be exercised;
* the rent payable for the first 12 months of the renewed lease;
* the availability of an early rent review process under the amended Act;
* the availability of a cooling off period under the amended Act; and
* any changes to the most recent disclosure statement provided to the tenant.
Failure by landlords to provide any of the above information in the notice (or failure to provide the notice at all) will mean an automatic extension of the option period for a period of 3 months from the date the compliant notice is given to the tenant.
Where a lease provides for market rent review, the Act now gives a tenant the right to request an early rent review within 28 days of receipt of the landlord’s renewal notice. The tenant has 14 days to agree to the reviewed rent and proceed to exercise the option.
If the tenant doesn’t apply for an early market rent review, the tenant will have 14 days to cool off by given written notice that the tenant no longer wishes to renew the lease.
Security deposits must now be refunded to the tenants within 30 days of the end of the lease, provided that the tenant has complied with its obligations under the lease (including any requirement to make good).
Contact Fleur Craig of Armour-Craig Legal on (03) 5636 4986 for assistance.