What section 57 says
Under the Retail Leases Act 2003 (Vic), every retail lease is taken to include rules that apply if the premises, or the building they are in, are damaged. The rent reductions cover outgoings and other charges as well as rent. The rules work whatever the lease says, because a lease term is void to the extent that it is inconsistent with the Act (s 94). Section 57 applies only to retail leases, so first check that the Retail Leases Act applies to yours.
Section 57 is about damage. A fall in trade for other reasons is not covered by it, although compensation may be payable under section 54 where the landlord, or someone acting for it, substantially inhibits access to the premises, or unreasonably takes action that causes significant disruption to trading. See our guide to the Retail Leases Act 2003 (Vic) for the rest of the Act.
How much the rent is reduced
Unless the tenant caused the damage:
- If the premises cannot be used. The tenant is not liable for rent, outgoings or other charges for any period during which the premises cannot be used under the lease, or are inaccessible, because of the damage. That includes damage to the building that cuts off access, even where the premises themselves are untouched.
- If use is reduced. If the premises can still be used under the lease, but the damage reduces that use to some extent, the tenant’s liability for rent, outgoings and other charges for that period is decreased to the same extent.
The Act sets no formula for a partial reduction. Depending on the facts, the parties may look at the floor area lost, the parts of the business that cannot operate, and loss of access or services. Because the figure is often disputed, evidence matters: photographs, reports, correspondence with the landlord and a record of how the damage affected your use and when.
Section 57 does not, by itself, say who must repair the damage. The landlord’s duty to maintain under section 52 and the lease answer that question. See landlord repairs under section 52.
Ending the lease after damage
Section 57 gives two rights to end a retail lease:
- Repair impracticable or undesirable. If the landlord reasonably considers that the extent of the damage makes repair impracticable or undesirable, and notifies the tenant in writing, either the landlord or the tenant may end the lease by giving the other at least 7 days’ written notice.
- The landlord does not repair. If the landlord fails to repair the damage within a reasonable time after the tenant asks it in writing to do so, the tenant may end the lease by giving the landlord at least 7 days’ written notice.
The parties can also agree to end the lease if the premises or the building are damaged or destroyed. A written request to repair starts the second right, so make the request in writing and keep a copy. Before you give notice, check the dates and the wording, and take advice: a termination that does not comply can leave the tenant in breach.
Damage the tenant caused, and compensation clauses
- The rent reductions do not apply where the tenant caused the damage.
- Section 57 does not affect any right of the landlord to recover damages from the tenant for the damage.
- A retail lease term is void to the extent that it limits a party’s liability to pay compensation to another party for damage to the premises or the building.
When the abatement is disputed
A landlord and tenant often agree that the premises were damaged but not on the amount of the reduction. The Supreme Court has held that a landlord’s default notice was not invalid merely because it demanded the full rent and made no allowance for the abatement the tenant claimed under section 57. In that case the tenant did not act on the notice, the landlord re-entered, and VCAT held that the lease had been terminated. The tenant was granted relief against forfeiture only on conditions requiring substantial payments, and its appeal failed.
The practical lesson for tenants is not to pay less and wait. Instead:
- tell the landlord in writing, early, what was damaged, when, how it affects your use, and how you calculate the reduction;
- try to agree an interim amount while the dispute is resolved;
- respond to any breach notice within its time, and get advice as soon as you receive one; and
- consider paying a disputed amount while reserving your rights in writing, rather than risking the lease.
For landlords, a demand for the full rent is not necessarily invalid, but a tenant’s genuine abatement claim may still succeed later. See rent arrears and breach notices.
Offices, warehouses and factories
Outside the Retail Leases Act there is no statutory abatement. The lease’s damage and destruction clause decides whether the rent abates, by how much and for how long, and whether either party can end the lease. If the lease has no such clause, the general law gives the tenant little protection, and the rent may remain payable. Before you sign, check whether:
- abatement is automatic or depends on the landlord’s decision;
- it covers outgoings as well as rent;
- it is lost if the tenant caused the damage or affected the landlord’s insurance;
- the landlord must repair, and within what time; and
- either party can end the lease if the repair takes too long.
How we help
- Advice on whether section 57 or your lease gives an abatement, and how much.
- Letters to the landlord setting out the claim and the calculation.
- Negotiating an interim or final amount, and repair timeframes.
- Responding to a breach notice, and urgent applications where the lease is at risk.
- Notices ending the lease where section 57 allows it.
Start with a free 15-minute phone call. We quote in writing before we start.
Common questions
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Under a retail lease, not for any period during which the premises cannot be used under the lease, or are inaccessible, because of the damage, unless you caused it. The same applies to outgoings and other charges.
Under a retail lease, rent, outgoings and other charges are decreased to the same extent that the damage reduces your use. The Act sets no formula, so the amount is often negotiated, and evidence of how your use was affected matters.
Under a retail lease, you may end it on at least 7 days’ written notice if the landlord fails to repair within a reasonable time after you ask in writing, or if the landlord notifies you in writing that it considers repair impracticable or undesirable. You and the landlord can also agree to end it.
Yes. The Supreme Court has held that a default notice was not invalid merely because it claimed the full rent without allowing for the abatement the tenant claimed. Respond within the time in the notice and get advice.
Only if the lease provides for it. Section 57 applies to retail leases. Other leases depend on their damage and destruction clause.
Law referred to
- Retail Leases Act 2003 (Vic) ss 52, 54, 57 and 94.
- Club Fogolar Furlan Melbourne v Paramount Investments Group Pty Ltd [2024] VSC 208.
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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