Retail lease renewal: when the Retail Leases Act stops applying
A retail lease stays a retail lease for its term. On renewal the question is asked again, and a tenant that is now a listed company, or occupancy costs above $1 million, can take the renewed lease outside the Act.
When the question is asked
Whether the Retail Leases Act 2003 (Vic) applies is tested when the lease is entered into and again when it is renewed. The tests are the usual ones: whether the premises are retail premises, and whether an exclusion applies, such as occupancy costs over $1,000,000 a year excluding GST, or a tenant that is a listed corporation or a subsidiary of one. They are explained in does the Retail Leases Act apply to my lease.
Between those points, the answer does not change. That gives both sides certainty for the term, but it means a renewal can produce a lease governed by different rules from the one before it. For what the Act requires while it applies, see our guide to the Retail Leases Act 2003 (Vic).
No exit during the term
The Court of Appeal settled this in 2020. A club’s lease was a retail lease when it was entered into, and the occupancy costs later rose above the threshold. The landlord argued that the Act had stopped applying, so that the tenant now had to pay land tax. The Court rejected that argument: a lease that is a retail lease when it is entered into cannot cease to be one during its term, and a lease that moved in and out of the Act as circumstances changed would deprive the parties of any certainty about their rights and obligations.
The same applies when a retail lease is assigned to a listed company during the term. The assignee takes over a lease that is governed by the Act, and it remains governed by the Act until the term ends. On a sale of the business, see assigning the lease.
Renewal by a listed company, or above $1 million
A renewal is different. In a 2025 decision about a child care centre, the lease began in 2008 for 5 years with five further options of 5 years each, and the Act applied to it. In 2015 it was assigned to a listed company. The listed tenant then exercised options for terms starting in 2018 and 2023. VCAT held that whether the Act applied was reviewed at each renewal, and because the tenant was a listed corporation when each renewed term began, the Act did not apply to either renewed term.
The occupancy cost exclusion works on the same footing, because it too is tested on renewal. If the rent (not counting turnover rent), the landlord’s estimated outgoings and prescribed costs such as marketing fund contributions exceed $1,000,000 a year, excluding GST, at the renewal, the renewed lease is outside the Act. Where the figures are close to the threshold, the calculation and its timing need care.
What happens to the lease terms
An option usually renews the lease on the same terms as the existing lease, apart from the rent and the further options. When the renewed lease is outside the Act, three kinds of terms need attention.
- Terms the Act made void. A clause making the tenant pay land tax, or a ratchet that stops the rent falling at a market review, is void while the Act applies. Discussing the landlord’s argument in the 2020 case, the Court of Appeal observed that such clauses are void only in particular circumstances, and that if the Act ceased to apply there would be no reason why they should not operate. That suggests they may operate in a renewed term outside the Act. In the Supreme Court decision that the Court of Appeal upheld, however, the judge took the view that, on the wording of that lease’s option clause, the void parts were not carried into the renewed lease. The answer depends on the renewal clause and is not settled.
- Terms the Act implied. The Act implies some terms into a retail lease, such as the landlord’s obligation to maintain the structure, fixtures, plant and equipment. The Supreme Court judge also indicated that terms of this kind would likely carry into a renewed lease made on the same terms, unless the lease provides otherwise.
- Terms drafted for both cases. Some leases already say what happens if the Act does not apply. In the 2025 child care centre case, the rent review clause set out one process if the Act applied and another if it did not. VCAT held that the clause was not void, because it did not try to avoid the Act but anticipated that it might not apply. It operated in the renewed term: the tenant proposed a rent, the landlord did not object in writing within 14 days, and that rent became binding.
For a landlord, the practical question is often land tax: whether it can now be recovered depends on the renewal clause and the land tax clause. For a tenant, it is whether the protections it relied on survive.
Variations, extensions and new leases
Under the general law, a variation that extends the term of a lease, or adds to the premises, may operate as a surrender of the existing lease and the grant of a new one, whatever the parties call it. A variation of other terms, such as the rent or the permitted use, generally does not, although it depends on what is agreed. If a variation does create a new lease, whether the Act applies may be asked afresh at that point, and the Act’s requirements for entering into a lease, such as the disclosure statement, may apply. The background to the 2020 Court of Appeal case is an example: VCAT had earlier treated a variation that extended the term of a lease granted in 1998 as a surrender and re-grant, which brought the new lease under the 2003 Act.
Before agreeing to extend a lease, or to add space, check whether the variation could create a new lease, and what that would mean for the Act, guarantors and security. See lease variations.
Before a renewal
- Check the status at the renewal date. Is the tenant, or its parent, now listed? Will occupancy costs for the renewed term exceed $1 million a year?
- Read the option clause. It decides which terms carry into the renewed lease.
- Keep complying until the renewal. The current lease is still governed by the Act for its whole term, so the landlord’s obligations continue, including the written reminder at least 3 months before the last date to exercise an option. See options to renew.
- Agree the position in writing. If the parties agree which terms apply in the renewed term, record it before the option is exercised or the renewal is signed.
How we help
- A free 15-minute phone call before an option deadline or renewal.
- Advice on whether a renewed lease, an assignment to a listed company or a variation takes the lease outside the Act.
- Working out which terms, including land tax and rent review clauses, operate in the renewed term.
- Renewal documents, variations and deeds of lease. We quote in writing before we start.
Common questions
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Yes. A lease that was a retail lease when it was entered into stays a retail lease for its term, even if occupancy costs later exceed $1 million a year. The question is asked again on renewal.
A lease entered into or renewed by a listed corporation, or a subsidiary of one, is outside the Act. If a retail lease is assigned to a listed company during the term, it stays a retail lease until the term ends, but VCAT has held that the Act does not apply to a renewed term taken by the listed tenant.
Only if the renewed lease is outside the Act and the lease terms allow it. Whether a land tax clause that was void during the earlier term operates in the renewed term is not settled, and depends on the renewal clause.
It may. Under the general law, a variation that extends the term or adds premises may operate as a surrender and re-grant. Whether the Act applies may then be asked afresh.
Law referred to
- Retail Leases Act 2003 (Vic) ss 4(2), 11, 28, 35(3), 50, 52 and 94.
- Retail Leases Regulations 2023 (Vic) reg 6.
- Richmond Football Club Ltd v Verraty Pty Ltd [2019] VSC 597; Verraty Pty Ltd v Richmond Football Club Ltd [2020] VSCA 267, [90].
- Tiba Kebab Pty Ltd v G8 Education Ltd [2025] VCAT 987.
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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