LIV lease renewal: is there a market review when you exercise an option?
A construction problem keeps coming up in some editions of the Law Institute of Victoria's standard form lease: whether the rent for a renewed term is set by a market review, even where the schedule says market reviews are not applicable. VCAT has decided it both ways, depending on the wording.
The issue in short
The Law Institute of Victoria (LIV) publishes a standard form commercial lease that is widely used in Victoria. It has a printed set of clauses and a schedule that is completed for each lease. In some editions, the renewal clause says the starting rent for a further term is to be worked out under the market review clause. The schedule, completed by whoever prepared the lease, may say that market reviews are “not applicable”, or may set CPI or fixed increases instead.
When the tenant exercises an option, the two can point in different directions. A landlord expecting a market review at the start of the further term, and a tenant expecting a fixed or CPI increase, can both find support in the same document. The difference can be substantial.
What VCAT has decided
- Market review applied (2006 edition). VCAT accepted the landlord’s argument that the renewal clause required a market review to set the starting rent of the further term, although the schedule said market reviews were not applicable. It read the schedule’s review items as dealing with reviews during a term, not with the starting rent of a renewal.
- Same result (2009 edition). Where the relevant clauses were materially the same, VCAT followed that reasoning in a later case.
- Different result (2014 revision). In this lease the schedule expressly dealt with further terms, providing for fixed increases, including at the start of each further term. VCAT held that the two mechanisms could not be reconciled, and that the specifically completed schedule prevailed over the printed clause. The starting rent for each further term was the fixed increase on the previous year’s rent.
These are VCAT decisions, and each turned on its own lease. They show that the answer depends on the edition, how the schedule was completed, and any special conditions, not on a general rule. A 2021 revision of the form changed the renewal wording so that the starting rent of a further term is worked out under the schedule. That reduces the problem, but only if the schedule is completed carefully for the initial term and for each further term. Many leases on older editions are still running.
Why it matters
- The rent for years ahead. A market review can move the rent a long way from a fixed or CPI figure. Under a retail lease, a market review can also take the rent down.
- The landlord’s option notice. Under a retail lease, the landlord must tell the tenant the rent for the first 12 months of the renewed term at least 3 months before the last date to exercise the option (s 28(1A) of the Retail Leases Act 2003 (Vic)). VCAT has held that a notice stating a fixed rent, where the lease sets the new rent by market review, is not a valid notice. A landlord who misreads its own lease may find the time for exercising the option extended.
- Early review and cooling off. If the renewal rent is set by market review, a retail tenant may ask for an early market review within 28 days after the landlord’s notice (s 28A). A tenant who exercises without asking for one has a 14-day cooling-off period (s 28B).
- What the Act requires. A retail lease with an option must state how the rent for the renewed term is to be worked out, and a review clause must state when reviews happen and on what basis (ss 27(1)(d) and 35(1)).
Checking your lease
- Identify which edition or revision of the LIV form was used.
- Read the renewal clause and note how it says the starting rent for a further term is set.
- Read the schedule’s rent review items. Do they deal separately with the initial term and with further terms? Do they say how the starting rent of a further term is set?
- Read the special conditions and any annexures, which may override the printed clauses.
- Check any variation, extension or earlier renewal documents, which may have changed the position.
If the clause and the schedule point different ways, get advice before the option window opens, not after the landlord’s notice arrives.
For tenants
- Work out the basis before you exercise. If the landlord’s notice states a rent on a basis you think is wrong, raise it in writing and get advice before the last date for exercise.
- If a market review applies, consider asking for an early review within the 28 days, so you know the rent before you commit. See options to renew.
- If a market review proceeds, prepare a written submission to the valuer. See challenging a market rent determination.
For landlords
- Before giving the option notice, confirm how the renewal rent is set under your lease and state the rent on that basis.
- When using the LIV form for a new lease, complete the schedule for both the initial term and each further term, including the starting rent of each further term.
- If you want a particular method, add a special condition that says, for each further term, whether the starting rent is set by market review, CPI or a fixed increase, and that it prevails over the printed clauses and the schedule.
- Under a retail lease, the basis must be one the Act permits. See rent reviews and preparing a lease.
One sentence can settle it. Most of these disputes would not arise if the lease said, in a special condition, exactly how the starting rent of each further term is worked out, and that the special condition prevails.
How we help
- Reading your LIV lease and advising how the renewal rent is set, before the option window.
- Option notices, early market reviews and the exercise of options.
- Drafting special conditions for new leases on the LIV form.
- Disputes about renewal rent at mediation and VCAT. Start with a free 15-minute phone call.
Common questions
Can’t see your question? Call 1800 776 529 or send us a message.
It depends on the edition, how the schedule was completed and any special conditions. In some editions, VCAT has held that the renewal clause requires a market review for the starting rent even where the schedule says market reviews are not applicable. In another, a schedule that dealt expressly with further terms prevailed.
Not necessarily. In some editions, VCAT has read those schedule items as applying only to reviews during a term, not to the starting rent of a renewed term. Have the whole lease checked.
Under a retail lease, yes, if the renewal rent is set by market review. Ask in writing within 28 days after the landlord’s option notice.
Complete the schedule for each further term, and add a special condition that states exactly how the starting rent of each further term is set and that it prevails over the printed clauses.
Law referred to
- Retail Leases Act 2003 (Vic) ss 27(1)(d), 28(1A), 28A, 28B and 35(1) and (2).
- MD & S Griggs Pty Ltd v DWH Pty Ltd [2016] VCAT 1718.
- Baroud Nominees Pty Ltd v Mereland Technology Pty Ltd [2022] VCAT 516.
- Amazing Accommodations Pty Ltd v OU [2023] VCAT 986.
- Pagica Pty Ltd v Inlet Property Pty Ltd [2024] VCAT 830.
Last reviewed: October 2026, by a Victorian solicitor with a current practising certificate. This page is general information about Victorian law as at October 2026. It is not legal advice about your lease.
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