The Retail Leases Act 2003 (Vic) is the law that governs most retail shop leases in Victoria. It applies to premises used wholly or predominantly to sell or hire goods by retail, or to provide services to the public, where yearly occupancy costs are not more than $1 million excluding GST.
The Retail Leases Act Victoria gives tenants a minimum five year term, a disclosure statement 14 days before signing, protection from land tax charges, and a mediation pathway through the Victorian Small Business Commission.
The Act extends beyond a shopfront in a mall. A cold storage warehouse in Laverton that served only business customers has already been held by the Court of Appeal to be retail premises.
Does the Retail Leases Act 2003 Apply to Your Premises?
The Act applies if the premises are used wholly or predominantly for the retail sale or hire of goods, or for the retail provision of services, and none of the statutory exclusions apply. Section 4 of the Retail Leases Act 2003 sets this out, and it is deliberately broad.
There is no requirement that the premises be a shop, that they sit in a shopping centre, or that customers walk in off the street.
What matters is the use of the premises and whether the tenant sells goods or supplies services to people who use them up rather than passing them on.
The test is applied at the date the lease is entered into or renewed, not at the date a dispute arises.
The question affects a large number of businesses, with the Australian Bureau of Statistics counting 156,169 actively trading retail trade businesses in Australia at 30 June 2025.
That single point decides whether a tenant gets five years of security, protection from land tax, and access to low-cost mediation, or whether the lease is treated as an ordinary commercial lease rather than a retail lease, with none of those safeguards.
What Is the Services to the Public Test?
The services to the public test asks whether the tenant supplies services to the ultimate consumer, meaning the person or business that uses the service rather than passing it on unchanged to someone else.
The Court of Appeal settled this in IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd [2017] VSCA 178.
The tenant ran freezer warehouses at Laverton and stored dairy, seafood and similar goods for food industry clients.
Every customer was a business, and the site was an industrial warehouse rather than a shop.
The Court still held the premises were retail premises, because customers paid a fee, used the storage themselves without resupplying it, and nothing stopped a member of the public from paying for the same service.
The practical effect is that business-to-business services can fall inside the Act.
Businesses such as mechanics, printers, freight handlers, laboratories, gyms, medical suites and equipment hire yards are examples of tenancies where this question needs to be assessed rather than assumed.
Among the considerations a court weighs are whether a fee is charged, whether the service is generally available to anyone willing to pay it, and whether the customer consumes the service rather than on-selling it.
The inquiry remains fact-sensitive, so no single factor decides it.
Which Premises Are Excluded From the Act?
Premises are excluded when yearly occupancy costs are more than $1 million excluding GST, when the tenant is a listed corporation or its subsidiary, or when a Ministerial Determination carves the premises or the lease out.
The table below compares what falls inside the Act against what falls outside it, on the understanding that premises must satisfy the use test and clear every exclusion before the Act applies.
| Feature | Covered by the Act | Excluded from the Act |
| Use of premises | Retail sale or hire of goods, or retail provision of services | Use excluded by Ministerial Determination, such as farming |
| Occupancy costs | Not more than $1,000,000 per year excluding GST | More than $1,000,000 per year excluding GST |
| Tenant status | Tenant trades on its own account | Listed corporations and their subsidiaries, including foreign listed bodies, and tenants carrying on the business as the landlord’s employee or agent |
| Location in building | Entirely on any one of the first three storeys | Retail services premises above the first three storeys |
| Lease term | One year or more, or a shorter term once possession has continued for one year | Terms under one year, unless possession continues past one year |
| Named exclusions | Ordinary shops, cafes, service businesses | Barristers’ Chambers Limited, Melbourne Market Authority market land, the community and charitable arrangements covered by the relevant Determination, and leases of 15 years or more carrying the specified substantial works or financial obligations |
The $1 million figure comes from regulation 6 of the Retail Leases Regulations 2023, and occupancy costs mean base rent excluding any turnover component, plus estimated outgoings and prescribed costs such as marketing fund contributions.
Because section 4 excludes premises where occupancy costs are more than the prescribed amount, a lease sitting at exactly $1 million can still be covered.
A lease granted for less than a year starts outside the Act, but the Act can begin to apply once the tenant has been in continuous possession for a year.
The upper storey exclusion only applies to premises used for the retail provision of services, so a shop selling goods on the tenth floor can still be covered.
The full list of Ministerial Determinations sits with the Victorian Small Business Commission, and it is worth checking because the categories are narrow and technical.
Can a Lease Stop Being a Retail Lease Part Way Through?
Ordinarily no, because a lease that is a retail premises lease when it is entered into generally stays covered by the Act for the whole of that term, even if the premises later stop meeting the definition.
The Court of Appeal decided this in Verraty Pty Ltd v Richmond Football Club Ltd [2020] VSCA 267.
The occupancy costs under the lease later climbed past the prescribed threshold, and the landlord argued the lease had jumped out of the Act.
The Court rejected that, holding the Act requires a single assessment at the point the lease is entered into or renewed rather than a rolling review.
Allowing leases to move in and out of the Act would have destroyed the certainty the legislation was written to create.
For tenants, this means protections such as the land tax prohibition and rent review rules stay in place for the whole term.
For landlords it means a rent increase that pushes occupancy costs past $1 million will not release the lease from the Act, and any recovery of land tax after that point remains void.
A variation substantial enough to amount in law to a new lease is a different situation, because the test would then be applied afresh at that point.
How Much Notice Must a Landlord Give Before You Sign?
A landlord must give the tenant a disclosure statement in the prescribed form and a copy of the proposed lease at least 14 days before the retail premises lease is entered into.
This is set out in section 17 of the Retail Leases Act 2003.
The 14-day period replaced the old seven-day period on 1 October 2020, and some online guides still quote the outdated figure.
The disclosure statement is the document that tells a tenant what the rent is, what outgoings they will be asked to contribute to, what the premises can be used for, and what the landlord’s repair obligations are.
The prescribed forms themselves were rewritten with effect from 1 December 2022, and a landlord using a pre-2022 template is not complying with the Act.
There is also a newer obligation to plan for, because for any retail lease negotiations beginning on or after 1 July 2026 the landlord must give the prospective tenant a copy of the updated Retail Leases Information Brochure published by the Victorian Small Business Commission.
That brochure replaces earlier versions and must be handed over at the start of negotiations rather than with the lease documents.
Under a sublease, the sublandlord only needs to pass on the head lease disclosure statement together with details of any changes they know about or ought reasonably to know about.
What Happens if the Disclosure Statement Is Late?
If the landlord hands over the disclosure statement and proposed lease fewer than 14 days before the lease is signed, the term of the lease is taken to start 14 days after those documents were given.
The lease is not void, and the tenant does not lose the premises.
This changes the statutory commencement of the term, and may in turn affect the expiry date, rent commencement and other dates tied to commencement.
Dates fixed by reference to a specific calendar day, such as a separately negotiated fit-out or payment date, depend on how the particular lease is worded.
That still has real financial consequences for a landlord who was counting on rent from a particular day.
It also means a tenant who signed in a rush may be entitled to a fortnight of the term that the landlord thought had already run.
What Can You Do if the Disclosure Statement Is Missing or Wrong?
A tenant who never received a disclosure statement can give the landlord written notice that it was not provided, no earlier than seven days and no later than 90 days after entering the lease.
Once that notice is given, the tenant may withhold rent until the disclosure statement arrives, is not liable for rent for that period, and may then terminate the lease within seven days of receiving the statement.
A separate remedy applies where a disclosure statement was given but was misleading, false or materially incomplete.
In that case the tenant may terminate within 28 days of the latest of three events: receiving the disclosure statement, receiving the copy of the lease, or entering into the lease.
Neither termination right is automatic, because section 18 lets the landlord serve a notice of objection within 14 days on the grounds that it acted honestly and reasonably, ought fairly to be excused, and that the tenant is substantially in as good a position as if the contravention had not happened.
A tenant who does not reply to that objection in writing within 14 days is taken to have accepted it, and the termination does not take effect while the objection is being resolved.
These are short windows, and they close quickly, so a tenant who suspects a problem should get advice early rather than waiting to see how the tenancy goes.
What Rights Does the Act Give Victorian Retail Tenants?
The Act guarantees a minimum five-year term, bans landlords from passing on land tax, stops outgoings being charged until an estimate is given, requires security deposits to be returned within 30 days, and makes the landlord responsible for structural repairs.
None of these rights can be contracted out of, because the Act overrides anything inconsistent in the lease.
That is the point of the legislation.
A landlord cannot draft around it, and a tenant who signed a lease containing a void clause is not bound by that clause simply because they agreed to it.
How Long Must a Victorian Retail Lease Run?
A retail premises lease must run for at least five years in total, counting the initial term plus any further terms available under an option to renew.
If a lease is granted for less than five years, section 21 does not make it void.
Instead, the term is automatically extended by however long is needed to reach five years, and if the lease contains no rent review mechanism for that extra period, current market rent applies.
There are three important qualifications.
The first is where the lease is a renewal, and the tenant’s occupation continues without a break.
The second applies where the landlord holds the premises under a head lease with five years or less left to run, in which case the minimum is the remaining head lease term less one day rather than five years.
The third is where the tenant obtains a certificate from the Small Business Commission confirming the Commission has explained what the five-year rule means and what giving up that protection involves.
The Commission must consider a request made before the lease is entered into or within 90 days afterwards, may consider a later request, and must generally issue the certificate within 21 days.
The certificate only displaces the five-year rule once the tenant actually gives it to the landlord.
Can a Landlord Charge Land Tax to a Retail Tenant in Victoria?
No, any clause in a retail premises lease that makes the tenant liable for land tax payable by the landlord is void to that extent.
Section 50 was amended by the Commercial and Industrial Property Tax Reform Act 2024, and the current version of the Act took effect on 1 July 2024.
Section 50 now voids clauses that make a retail tenant liable for either land tax under the Land Tax Act 2005 or the new commercial and industrial property tax.
This matters a great deal as Victorian commercial and industrial land moves across to the new tax over the coming years.
A landlord who assumes the new tax can be recovered as an outgoing because it is not technically land tax will find the amendment closes that door.
Tenants who have been paying land tax under a retail lease should check whether those payments were ever recoverable in the first place, because a void clause does not become valid through years of payment.
Getting money back is a separate question from the clause being void, since limitation periods and the circumstances in which each payment was made will affect any claim.
Can a Retail Lease Cap Rent Increases?
Yes, a cap on a rent review is valid in a Victorian retail lease, and the Supreme Court confirmed this in Aldi Foods Pty Ltd v Northcote Shopping Centre Pty Ltd [2024] VSC 799.
VCAT had previously held that a clause reading “CPI capped at 6%” applied two different bases to a single review and was therefore void under section 35(2).
Justice Croft disagreed, holding that a cap sets a ceiling on the outcome after a compliant review method has been applied rather than introducing a second method.
The Court of Appeal refused leave to appeal in Northcote Shopping Centre Pty Ltd v Aldi Foods Pty Ltd [2026] VSCA 140 on 16 June 2026, so the position is now settled.
Section 35 still limits rent reviews to one basis: a fixed percentage, an independently published index, a fixed amount, current market rent, or a prescribed basis.
Ratchet clauses remain void, meaning a landlord cannot use a clause that stops the rent going down where the review is on a current market rent basis.
When Can a Landlord Recover Outgoings?
A landlord cannot recover outgoings from a retail tenant until a written estimate of those outgoings has been given.
Section 46 requires the estimate before the lease begins, and then at least one month before the start of each of the landlord’s accounting periods.
If the estimate is not given, the tenant is not liable to contribute to those outgoings until it is, and there is no ability to claim them retrospectively.
Several categories of outgoings can never be passed on at all.
Capital costs, depreciation, sinking fund contributions, interest on the landlord’s borrowings, and rent associated with other land all sit outside what a retail tenant can be asked to pay.
Management fees are capped by the Act, and a tenant is generally not liable for outgoings that are not properly specified in the lease or estimated as required.
A provision requiring the tenant to pay or contribute towards the cost of fitting out the premises is void unless that liability was disclosed in the disclosure statement.
After each accounting period the landlord must give the tenant a statement of outgoings within three months, and any underpayment or overpayment is then adjusted.
Who Pays for Repairs and Essential Safety Measures?
The landlord is responsible for maintaining the structure of the premises, the fixtures in them, and the plant, equipment and appliances that provide services such as water, power and air conditioning.
The obligation is to keep those items in the condition they were in when the lease started.
The landlord is not liable where the need for repair arose from the tenant’s misuse, or where the item is something the tenant is entitled to remove.
Where a repair is needed to fix damage having a substantial effect on the tenant’s business, and the tenant has taken reasonable steps to get the landlord or the agent to carry it out and been unable to, the tenant may arrange the work itself.
The tenant must then give the landlord written notice of the repairs and their cost within 14 days after the work is carried out, and the landlord is liable for the reasonable cost.
Since 23 September 2020 the parties can agree in the lease that the tenant will carry out or contribute to repairs and maintenance of essential safety measures such as fire doors, sprinklers and exit signs.
Any such contribution has to be authorised by the lease and still meet the disclosure and outgoings requirements in the Act.
That agreement does not shift the landlord’s own duties as building owner under the Building Act 1993.
What Must a Landlord Do Before Your Option to Renew Expires?
A landlord must give written notice at least three months before the last date an option to renew can be exercised, setting out the deadline, the rent for the first 12 months of the new term, the right to ask for an early rent review, the cooling off period, and any changes to the last disclosure statement other than rent.
If that notice is late or incomplete, the last date for exercising the option shifts to three months after the landlord finally gives proper notice.
The lease continues on the same terms until then, and the tenant can walk away by giving written notice before the extended period ends.
Where the lease provides for the rent in the renewed term to be reviewed to current market rent, the tenant can request that review early, within 28 days of receiving the renewal notice, and the cost of any valuation is shared equally between the parties.
That right does not attach to reviews on a fixed percentage, fixed amount or index basis.
Where the landlord and tenant cannot agree on a valuer or on the rent, either party can ask the Small Business Commission to appoint an independent retail valuer.
After exercising an option without having asked for an early rent review, a tenant has a 14 day cooling off period in which they can withdraw in writing.
Withdrawing cannot be undone, and the lease is extended by 14 days.
Where a lease has no option at all, the landlord must tell the tenant in writing between six and 12 months before expiry whether a renewal will be offered, and failing to do so extends the lease by six months from whenever that notice is eventually given.
How Are Retail Lease Disputes Resolved in Victoria?
Retail tenancy disputes must go to the Victorian Small Business Commission for mediation before they can be taken to the Victorian Civil and Administrative Tribunal.
Section 87 makes the Commission’s written certificate a precondition to starting a proceeding at the Tribunal, and that certificate is only issued once mediation has failed or is unlikely to resolve the dispute.
The one clear exception is an application for an order in the nature of an injunction, which can be brought without a certificate.
The Victorian Small Business Commission reported 1,611 applications for its dispute resolution services in 2024-25, and retail leasing disputes made up just over half of them at 53 per cent.
Of the 256 matters mediated that year across all the legislation the Commission administers, 69 per cent were resolved.
Looking at retail leases on their own, 195 matters were mediated and 126 of them settled, a rate of 65 per cent.
Those numbers are worth knowing before anyone reaches for litigation, because most matters that reach mediation are resolved there.
What Does the Victorian Small Business Commission Do?
The Commission runs low cost mediation for retail tenancy disputes, issues the certificates that unlock VCAT, provides five year term certificates under section 21, and appoints independent valuers when parties cannot agree on market rent.
Preliminary assistance is free because the Commission is government funded, while formal mediation is subsidised rather than free.
As at May 2026 the published fee is $300 including GST per party for a half day mediation and $600 for a full day, which the Commission notes is subject to change.
A mediator does not decide the dispute, but helps the parties reach their own agreement, which is recorded in a terms of settlement document.
That document is binding and can be enforced through a court or tribunal, although the Commission itself does not enforce it.
The Commission’s 2024-25 annual report notes that demand for mediations now exceeds its resourcing, with average wait times from application reaching 17 weeks.
That is a practical reason to raise a problem early rather than letting it run.
When Can You Take a Retail Lease Dispute to VCAT?
An application can be made to VCAT once the Small Business Commission has certified that mediation has failed or is unlikely to succeed.
Landlords, tenants, guarantors, people who gave an indemnity, and valuers can all apply.
The Tribunal has the same jurisdiction and powers as the Supreme Court in applications for forfeiture or relief against forfeiture, including equitable jurisdiction.
Most retail tenancy disputes sit exclusively with VCAT rather than the courts, with limited exceptions for relief against forfeiture and unconscionable conduct claims.
Each party bears its own costs at VCAT under section 92, which keeps the process accessible but also means a winning party usually cannot recover legal fees.
The Tribunal can depart from that where it is fair to do so, such as where a party conducted the proceeding in a vexatious way that unnecessarily disadvantaged the other side, or refused to take part in or withdrew from mediation.
What Else Should Victorian Retail Tenants and Landlords Watch For?
Several rules sit outside the headline protections but decide real disputes, including bans on key money, limits on lease preparation costs, assignment procedures, and extra obligations in shopping centres.
They are easy to overlook when a lease is being negotiated, because they sit outside the clauses most people read closely.
A tenant who knows them can push back on charges that were never lawful.
Are Key Money and Lease Preparation Costs Allowed?
Key money and payments for goodwill are prohibited under the Act, so a landlord cannot ask a tenant to pay a lump sum simply for being granted or renewing a lease.
Separately, a landlord cannot pass on the legal or other costs of negotiating, preparing or executing the lease, of obtaining a mortgagee’s consent to the lease, or of complying with the Act itself.
Reasonable legal costs can be recovered in connection with an assignment or sublease, including investigating a proposed assignee or subtenant and obtaining the consents that assignment needs.
Security deposits must be held in an interest bearing account on the tenant’s behalf, with the interest forming part of the deposit.
Where the tenant has met all of their obligations, the deposit must be returned within 30 days of the lease ending.
A landlord also cannot unreasonably refuse a bank guarantee from an authorised deposit taking institution in place of cash.
Can a Landlord Refuse Consent to an Assignment?
A landlord can only withhold consent to an assignment of a retail premises lease on the grounds set out in the Act, not for any reason they choose.
Those grounds include the proposed assignee intending to use the premises in a way not permitted by the lease, the assignee having financial resources or retail skills inferior to the current tenant, or the tenant not complying with the assignment procedure in the Act.
The procedure itself is prescriptive, and a landlord who does not respond within the required time may be taken to have consented.
An assignor and their guarantors can be released from future liability where the assignment relates to the sale of the business and the proper process is followed.
Getting the sequence right matters enormously to anyone selling a shop, because the lease is often the most valuable part of the sale.
What Extra Rules Apply in Shopping Centres?
Retail shopping centres attract an additional set of obligations under Part 8 of the Act covering trading hours, turnover information, marketing funds and tenant associations.
Changes to the centre’s core trading hours are regulated by the Act rather than left to the landlord alone, and individual turnover information must be kept confidential subject to the exceptions the Act allows.
Where tenants contribute to advertising and promotion, the landlord must prepare a marketing plan, report on how the money was spent, and carry forward anything unspent rather than keeping it.
A landlord cannot terminate a lease on the ground that the tenant’s sales were inadequate, and cannot impose geographical restrictions preventing a tenant trading elsewhere.
Tenants also have a protected right to form and join a tenants’ association without interference.
Get Help With Your Victorian Retail Lease
The Retail Leases Act Victoria decides whether a tenant gets five years of security, protection from land tax and access to low cost mediation, or none of it, and that answer turns on details in section 4 that are easy to get wrong.
Whether you are signing, renewing, assigning or arguing about a retail lease, the time to check your position is before a deadline passes rather than after.
As retail lease lawyers in Victoria, the team at my law firm can review your lease, check whether the Act applies and explain what it means for you, all at a fixed fee agreed upfront.
Contact my law firm today by calling 1300-529-888.
This article is general information about Victorian retail leasing law and is not legal advice, because how the Act applies depends on the wording of your lease, the permitted use, any renewals or variations, and the Ministerial Determinations in force at the time.
Frequently Asked Questions
Does the Retail Leases Act 2003 apply to office premises in Victoria?
Office premises are usually not covered, because the Act requires premises used wholly or predominantly for the retail sale of goods or the retail provision of services. An office used purely for a business’s own administration fails that test. An office where clients attend and pay for services, such as a consulting or treatment suite, may well be covered.
How many days before signing must a Victorian landlord give a disclosure statement?
At least 14 days before the lease is entered into, the landlord must give the tenant a disclosure statement in the prescribed form and a copy of the proposed lease. This period was extended from seven days on 1 October 2020. If the documents arrive late, the lease term begins 14 days after they were given.
What is the occupancy cost threshold for the Retail Leases Act in Victoria?
The prescribed amount is $1,000,000 per year excluding GST, set by regulation 6 of the Retail Leases Regulations 2023. Occupancy costs include base rent, excluding any turnover based component, plus estimated outgoings and prescribed costs such as marketing fund contributions. Premises are excluded only where costs are more than that figure, so a lease at exactly $1 million can still be covered.
Can a Victorian retail landlord recover land tax from a tenant?
No. Section 50 makes any retail lease clause void to the extent it makes the tenant liable for land tax the landlord owes. Since 1 July 2024 the same ban covers the commercial and industrial property tax introduced by the Commercial and Industrial Property Tax Reform Act 2024. Payments under a void clause were never lawfully owed.
Do I have to mediate before taking a retail lease dispute to VCAT?
Yes, in almost all cases. Section 87 requires the Victorian Small Business Commission to certify in writing that mediation has failed or is unlikely to resolve the dispute before VCAT can hear it. The main exception is an application for an order in the nature of an injunction. Commission mediation settled 65 per cent of retail lease matters in 2024-25.
What happens if a retail lease is granted for less than five years?
The lease is not void. Section 21 automatically extends the term by whatever period is needed to reach five years, counting any option periods. The exceptions are where the tenant has obtained a certificate from the Victorian Small Business Commission confirming the rule was explained to them, or where the lease is a renewal with unbroken occupation.