Challenging a specialist retail valuer's rent determination
Under a retail lease, a market rent determination by a specialist retail valuer usually becomes the rent. It can be set aside, but only on narrow grounds, so the most useful time to influence it is before it is made.
How a market rent determination is made
Where a retail lease provides for a review to current market rent, the Retail Leases Act 2003 (Vic) sets the rules (s 37):
- The basis. Current market rent is the rent obtainable at the review date in a free and open market between a willing landlord and a willing tenant at arm’s length, having regard to the lease terms, the rent expected for the premises if vacant and offered for the same or a substantially similar use, the outgoings the tenant contributes to, and the rent concessions and other benefits offered to prospective tenants of vacant premises. The value of the tenant’s goodwill and of its fixtures and fittings is left out.
- The valuer. If the parties do not agree on the rent, a specialist retail valuer appointed by agreement, or failing agreement by the Victorian Small Business Commission, determines it. Landlord and tenant pay the valuer’s costs in equal shares. A specialist retail valuer has at least 5 years’ experience valuing retail premises, or for a shopping centre, premises in regional or sub-regional centres (s 3).
- Information. The landlord must give the valuer relevant information about other leases in the same building or centre within 14 days of a request. Information supplied to the valuer is confidential (s 38).
- The determination. It must be in writing, contain detailed reasons, and specify the matters the valuer had regard to. It must be made within 45 days after the valuer accepts the appointment, or a longer period agreed or set by the Commission.
The Commission’s guidance says the rent the valuer determines becomes the rent for the premises. For how reviews work more generally, see rent reviews.
Written submissions to the valuer
The valuer may ask each party for information or a submission, and either party may get advice from its own valuer to make an informed submission. A good submission is often worth more than a later challenge. It should:
- identify the comparable rents, with their lease terms, incentives and dates;
- point out the lease terms that affect value, such as the permitted use, repair and outgoings obligations, the term remaining and any landlord fit-out;
- remind the valuer of what the Act requires to be left out, such as the tenant’s goodwill and fixtures; and
- respond to the other side’s evidence, if the valuer allows it.
In the cases below, determinations were set aside because the valuer did not explain how comparables, adjustments or lease terms were dealt with. A submission that puts those issues squarely to the valuer makes a properly reasoned determination more likely.
When a determination can be challenged
Disagreeing with the figure is not enough. Generally, a valuation binds the parties if the valuer did what the lease and the Act required, even if another valuer would have reached a different figure. A challenge usually has to show that the valuer did not do the required task.
No detailed reasons
Successful challenges often rest on the requirement for detailed reasons in s 37(6). VCAT has set aside determinations where the valuer:
- used a profits method and projected higher turnover without explaining how the figures were calculated (VCAT, upheld by the Supreme Court);
- relied on leases for different uses without making clear which comparables were for the same or a similar use, and made unexplained adjustments;
- did not explain how an unusual amount of landlord fit-out was treated, and assumed the tenant was responsible for repairs without addressing the landlord’s repair obligations under s 52; or
- did not explain why a supermarket’s rent was relevant to a pharmacy, or analyse the market evidence so the reader could see it had all been considered.
The wrong basis
A determination made on a basis the Act or the lease does not allow is open to challenge. But a method is not wrong just because a party dislikes it: the Supreme Court has held that a valuer’s use of the profits method to value a hotel did not breach s 37(2). Not every error is enough either. In one case VCAT declined to decide whether the lease required a net or a semi-gross rent, holding that an error by the valuer on that point would not have been a vitiating error.
If the determination is set aside
A fresh determination is needed. Some valuers’ terms of appointment say that a determination set aside by a court or tribunal goes back to the same valuer. VCAT has rejected arguments that such a clause, agreed after the parties failed to agree on the rent, was inconsistent with the parties’ rights under s 37(3), and that the valuer could not approach the question again with an open mind. An earlier Supreme Court decision, in a case without such a clause, suggested a determination should not go back to a valuer who had shown a tendency to support the challenged valuation after the challenge was made. Read the valuer’s terms before you sign them.
Where and how to challenge
The Small Business Commission’s guidance says a dispute about a valuer’s determination is not usually suitable for mediation, and that the party disagreeing may need to apply to VCAT for an injunction or for orders setting the determination aside. An injunction application does not need a Commission certificate. The Commission can still offer mediation if both parties are willing.
- Act promptly once the determination arrives.
- Get advice before paying less than the determined rent. Underpaying may put you in breach.
- Collect the lease, the valuer’s terms, both parties’ submissions and the determination.
See lease disputes for how retail disputes run.
Costs
- The valuer’s fee is shared equally between landlord and tenant (s 37(3)). If the determination is set aside, a fresh determination means a further fee.
- Each party pays for its own valuer’s advice and its own lawyers.
- In a retail tenancy proceeding at VCAT, each party usually bears its own costs. VCAT can order costs only where it is fair because a party conducted the proceeding vexatiously and unnecessarily disadvantaged the other, or refused to take part in or withdrew from mediation (s 92).
Weigh those costs against the rent at stake over the remaining term before starting a challenge.
Leases outside the Retail Leases Act
For offices, warehouses and factories outside the Act, s 37 does not apply. The lease sets the valuation basis, how the valuer is appointed, and whether reasons must be given. A challenge then depends on the lease and the general law about valuations, which is why the review clause deserves attention before signing. See our Retail Leases Act guide on which leases are covered.
How we help
- Preparing written submissions to the valuer, working with your own valuer.
- Reviewing a determination for grounds of challenge.
- VCAT applications to set aside a determination, or to defend one.
- Rent on renewal and early market reviews: see rent review on renewal under the LIV lease. Start with a free 15-minute phone call.
Common questions
Can’t see your question? Call 1800 776 529 or send us a message.
Yes, but on narrow grounds. Disagreeing with the figure is not enough. Challenges usually succeed where the valuer did not give the detailed reasons the Act requires or did not value on the basis the Act and the lease require.
Under a retail lease, the rent the valuer determines becomes the rent unless the determination is set aside. Keep paying it while you get advice.
The Small Business Commission says these disputes are not usually suitable for mediation. An application to VCAT for an injunction does not need a Commission certificate. We advise on the right application for your case.
Under a retail lease, the landlord and tenant pay the valuer’s costs in equal shares. Each pays its own costs of submissions and advice.
Possibly. If the valuer’s terms of appointment provide for it, VCAT has rejected arguments against enforcing that clause. Check the terms before you sign them.
Law referred to
- Retail Leases Act 2003 (Vic) ss 3 (definition of specialist retail valuer), 37, 38, 52 and 92.
- Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314.
- Higgins Nine Group Pty Ltd v Ladro Greville Street Pty Ltd [2016] VSC 244.
- Dalmatino Pty Ltd v Creative Laser Pty Ltd [2017] VCAT 875.
- Josephine Ung Pty Ltd v Jagjit Associates Pty Ltd [2017] VCAT 2111.
- 328 Hampshire Road Pty Ltd v Medical One Pty Ltd [2021] VCAT 1117.
- Medical One Pty Ltd v 328 Hampshire Road Pty Ltd [2022] VCAT 795.
- Epping Hotels Pty Ltd v Serene Hotels Pty Ltd [2015] VSC 104.
- Candoora No 19 Pty Ltd v Freixenet Australia Pty Ltd (No 2) [2008] VSC 478.
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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