The Retail Shop Leases Act is simpler than it sounds. If you are about to sign a lease for a shop in a shopping centre, or you are wondering whether the Act even applies to your premises, the rules are more straightforward than most people expect.
The Act applies to most retail premises under 1,000 square metres. When it applies, it gives tenants specific rights around disclosure, outgoings, rent reviews and early exit that do not exist under a general commercial lease. Knowing whether your lease falls inside or outside the Act changes almost every negotiation.
Our solicitors in Springfield and Ipswich help clients across Greater Springfield with retail and commercial leases, from reviewing a new lease to advising on make good and assignment.
Here is how the Retail Shop Leases Act generally works in Queensland, and what it means in practice.
Key takeaways
- The Act applies to retail premises under 1,000 square metres used for a retail business.
- Landlords must give tenants a disclosure statement at least seven days before signing.
- Land tax, insurance excess and sinking fund contributions cannot be charged to a retail tenant.
This article is general information only and is not legal advice. Every situation is different, and you should speak with a solicitor about your own circumstances.
Does the Retail Shop Leases Act apply to your Queensland premises?
A lease is generally a retail shop lease where the premises are under 1,000 square metres and used to carry on a retail business, according to the Queensland Small Business Commissioner. The Act also covers any business in a retail shopping centre, which the Commissioner defines as a centre with five or more retail shops, common ownership or management, and promotion as a centre.
Some businesses look retail but are excluded. Gyms, medical centres, offices, warehouses and car yards are not retail businesses for the purposes of the Act. The wholesale sale of goods is also excluded. Where a non-retail business operates in a retail shopping centre, the 25 per cent rule in the Act may determine whether it is covered.
QCAT has jurisdiction only for disputes that involve a retail shop lease under the Act. Whether a lease is or is not a retail shop lease is therefore a threshold question that matters before any dispute is raised.
What rights does the Act give retail tenants in Queensland?
Retail tenants in Queensland have specific protections that do not apply under a general commercial lease. The most important is the disclosure requirement. The landlord must give the tenant a disclosure statement at least seven days before the tenant enters into a retail shop lease, according to the Queensland Small Business Commissioner.
The Act also restricts what outgoings a landlord can recover from a retail tenant. Under the Act, outgoings are only recoverable if the lease specifically names them, and they must be apportioned by floor area. The Queensland Small Business Commissioner notes that land tax, insurance excess and sinking fund contributions cannot be charged to a retail tenant regardless of what the lease says.
A further protection applies to refits. A clause requiring a retail tenant to refurbish or refit the premises is void under the Act unless the lease gives general details of the nature, extent and timing of the required work, according to the Queensland Small Business Commissioner.
What outgoings can a Queensland landlord recover under the Act?
The Queensland Small Business Commissioner sets out three ways outgoings can be structured in a retail lease: direct recovery, net recovery and gross recovery. Whatever method is used, the outgoings must be specified in the lease to be recoverable from a retail tenant.
- › Permitted outgoings: council rates, water charges, fire service levies, building insurance premiums and common area maintenance, where named in the lease.
- › Prohibited outgoings: land tax, insurance excess and sinking fund contributions cannot be recovered from a retail tenant under any circumstances, according to the Queensland Small Business Commissioner.
- › Estimates and auditing: the landlord must give an estimate before the outgoings period and an audited statement, usually by 30 September, covering the period just ended. Where a single cost exceeds five per cent of the total, itemisation is required.
- › Disputes about outgoings: the Queensland Small Business Commissioner can mediate whether an outgoing was reasonably incurred, up to $750,000 in value. QCAT can arbitrate retail shop lease disputes generally.
How does a solicitor help with a retail lease in Queensland?
Entering into a retail shop lease is a significant commitment. A solicitor reviews the lease before signing, checks whether the Act applies, identifies any prohibited outgoings or void clauses, and advises on make good obligations, rent review mechanics and option terms, with reference to our conveyancing and commercial property team.
Step 1: Talk to us
Get in touch and we will explain how the Act applies to your situation and what the lease review process generally involves.
Step 2: Review the lease and disclosure documents
We review the lease against the Act's requirements, including whether the disclosure statement was given on time, whether the outgoings provisions comply and whether any prohibited clauses are present.
Step 3: Advise on negotiation and risk
We identify the terms that carry the most risk and advise on which provisions are worth negotiating, including rent review methods, make good obligations and option conditions.
Step 4: Support through to signing and beyond
We assist through the exchange of the signed lease and can advise on assignment, subletting, early exit and end-of-lease obligations as the tenancy progresses.
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When does the Retail Shop Leases Act not apply to your Queensland lease?
The Act does not apply to every commercial tenancy, and knowing when it does not apply is as important as knowing when it does. A lease falls outside the Act where the premises are 1,000 square metres or more, according to the Queensland Small Business Commissioner, who notes that QCAT has found it has no jurisdiction in cases above that threshold.
The Act also does not apply where the business is not a retail business under Schedule 1 of the Act. A business selling at wholesale, or a gym, medical centre, office or warehouse, generally falls outside the regime even if the premises are in a shopping centre. The 25 per cent rule in the Act determines whether a non-retail business that occupies a minority of a centre's space is captured.
For businesses that fall outside the Act, the lease is still a binding contract governed by Queensland's Property Law Act 2023. The protections around disclosure, prohibited outgoings and refit clauses do not apply, but the general contract rules do. That makes legal advice just as important, if not more so, because the tenant's rights depend entirely on what the lease says.
How do rent reviews and options to renew work under the Act?
Rent reviews in retail leases commonly use a fixed percentage, a CPI adjustment or a fixed dollar amount, according to the Queensland Small Business Commissioner. The Act prohibits two specific methods: ratchet clauses, which prevent rent from falling below a set level, and dual-method reviews that take the higher of two approaches. There is no statutory cap on rent increases.
Where the lease provides for a market rent review, the Commissioner notes that if the parties cannot agree within one month of the review date, a specialist retail valuer determines the market rent. QCAT can appoint the valuer, and the fee is split equally between the parties.
Options to renew are not mandatory under the Act. Without an option, the landlord is not required to offer a new lease at the end of the term. Where an option does exist, the Commissioner notes that the landlord must notify the tenant of the option date at least two months before it falls, and the tenant who exercises the option may withdraw if the landlord does not provide an updated disclosure statement within seven days.
What are the common misunderstandings about the Retail Shop Leases Act in Queensland?
One of the most common misunderstandings is that the Act applies to every shop. A business that sells products at retail may not be on the Act's Schedule 1 list of retail businesses, and a lease signed without checking can mean the tenant assumes protections that do not actually apply to them.
Another misconception is that a retail tenant can terminate early simply because the business is not performing. The Queensland Small Business Commissioner is clear that a lease is a binding contract, and neither party is ordinarily entitled to end it early because circumstances have changed. The Act does give a tenant the right to terminate within six months of entering the lease if the landlord failed its disclosure obligations, but that is a remedy for a specific breach, not a general exit.
A third area of confusion is make good. Tenants sometimes assume they only need to clean up and hand back the keys. In practice, the Commissioner notes that make good commonly requires repairing damage, removing fit-out and partitions, restoring the open plan and returning base building services. The lease wording governs, and a vague clause is one of the most common sources of end-of-lease disputes.
Frequently Asked Questions
What is the size threshold for a retail shop lease in Queensland?
Premises under 1,000 square metres used for a retail business generally fall within the Act, according to the Queensland Small Business Commissioner. The whole leased area counts toward that threshold.
Can a landlord charge land tax to a retail tenant in Queensland?
No. The Queensland Small Business Commissioner is clear that land tax, insurance excess and sinking fund contributions cannot be charged to a retail tenant, regardless of what the lease says.
How many days' notice must a Queensland landlord give before a tenant signs a retail lease?
At least seven days before the lease is entered into, the landlord must give a disclosure statement, according to the Queensland Small Business Commissioner. Failure to do so may allow the tenant to terminate within six months.
What is a ratchet clause, and is it allowed in a Queensland retail lease?
A ratchet clause prevents rent from falling below a set level at a review. The Queensland Small Business Commissioner confirms these are prohibited in retail shop leases, as are dual-method reviews.
Can a retail tenant in Queensland end a lease early if the business is struggling?
Generally no. The Queensland Small Business Commissioner is clear that a lease is a binding contract and neither party is ordinarily entitled to end it early because circumstances have changed. Legal advice can confirm what options are available in a particular situation.
Do I need a solicitor to review a retail lease in Springfield or Ipswich QLD?
A solicitor can confirm whether the Act applies, identify prohibited or void clauses, and advise on negotiation before signing. Reviewing a lease before committing is generally more straightforward than resolving a dispute after the lease has started.
What does make good mean at the end of a retail lease in Queensland?
Make good commonly requires repairing damage, removing fit-out and partitions, restoring the premises to open plan and returning base building services to their original state, according to the Queensland Small Business Commissioner. The lease wording governs exactly what is required.
Your Next Steps
Whether a lease is a retail shop lease or a general commercial lease changes what protections apply, what the landlord can charge and what rights a tenant has at review, renewal and exit. Getting clarity on that threshold question before signing is the most valuable step a business owner in Greater Springfield or Ipswich can take.
Every retail or commercial lease matter is different, and that's exactly why it's worth a conversation. Make an appointment with the Brookwater Legal team or call (07) 3437 8555.
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External Resources
- Queensland Small Business Commissioner – What is a retail shop lease in Queensland
- Queensland Small Business Commissioner – Outgoings
- Queensland Small Business Commissioner – Annual rent increases and market reviews
- Queensland Small Business Commissioner – Ending a lease early
- Queensland Small Business Commissioner – Make good
Brookwater Legal · This article contains general information only and does not constitute legal advice. It does not take into account your individual circumstances. You should obtain legal advice about your own situation before acting on anything in this article. Liability limited by a scheme approved under Professional Standards Legislation.
