“Jumping out” the Retail Leases Act – a clarification

Today I posted an article about Verraty Pty Ltd v Richmond Football Club [2019] VCAT 1073.

I have had queries about paragraph (i) where I said:

“where the commencing rent under a new lease does not exceed $1,000,000 for the first 12 months,  before the lease is entered into the landlord should make an estimate of outgoings for the first 12 months of the lease and keep a record of the making of the estimate;”

The point I was intending to make is that where a new lease is being entered into and the rent is less than $1,000,000 (but when added to outgoings  “occupancy costs” exceed $1,000,000), a failure to make an estimate under s.4(3) could result in the lease (assuming it concerns “retail premises” (s.4(1)) being a “retail premises lease”. The reason  is that “occupancy costs” constitute rent and an estimate of outgoings made by the landlord (s.4(3)); in the absence of an estimate of outgoings  the “occupancy costs” will be restricted to the amount of the rent. There is no need to give the estimate to the tenant.

A new lease will be a “retail premises lease” where “occupancy costs” do not exceed $1,000,000 in which case it is necessary to give a written estimate under s.46.

 

 

 

 

 

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