Start with the deal, the Act and the form
We start from the agreed terms, usually the signed letter of offer, and confirm whether the Retail Leases Act 2003 (Vic) applies. That depends on how the premises are used, or are to be used, under the lease and on the exclusions, not on what the lease calls itself. See does the Retail Leases Act apply.
Standard forms
Standard forms, such as the Law Institute of Victoria lease, save time but need care. The schedule and special conditions must match the deal and each other, and a blank or “not applicable” entry can have effects that are not obvious. Rent on renewal is one example: see the LIV lease and rent reviews on renewal. Clauses carried over from an old lease need checking against the current Act.
The retail leasing pack
| Document | When | Section |
|---|---|---|
| A copy of the proposed lease and the Small Business Commission’s information brochure | As soon as negotiations begin (not on a renewal) | s 15 |
| The disclosure statement in the prescribed form, and the proposed lease with the tenant, rent and term completed | At least 14 days before the lease is entered into | s 17 |
| An itemised estimate of outgoings | Before the lease is entered into, then at least one month before each accounting period | s 46 |
| A copy of the lease signed by both parties | Within 28 days after receiving the lease signed by the tenant | s 22 |
The disclosure statement is Schedule 1 to the Retail Leases Regulations 2023 (Vic), or Schedule 2 for premises in a retail shopping centre. A new brochure applies to negotiations starting on or after 1 July 2026. If documents are given late, the term is taken to start 14 days after they are given, and a missing or wrong statement can let the tenant withhold rent or end the lease. See retail lease disclosure statements.
Clauses that do not work in a retail lease
These provisions are void to the extent they conflict with the Act:
- a clause that stops the rent going down at a market review (s 35(3));
- a clause making the tenant pay the landlord’s land tax or commercial and industrial property tax (s 50);
- clauses making the tenant pay capital costs, depreciation, a sinking fund for capital works, interest on the landlord’s borrowings or head-lease rent, with limited exceptions such as essential safety measures (ss 41 to 45);
- a clause making the tenant pay for fit-out, unless the cost was disclosed in the disclosure statement (s 20).
Other provisions do not work as written. Outgoings are recoverable only if the lease specifies them and how they are worked out and recovered (s 39). The landlord cannot claim its costs of negotiating, preparing or signing the lease, or of obtaining its mortgagee’s consent, from the tenant or anyone else, though it can recover reasonable costs connected with an assignment or sublease (s 51). A term shorter than 5 years, including options, is generally extended to comply unless the tenant has given the landlord a Small Business Commission waiver certificate (s 21).
Rent review clauses
A retail lease must state when the rent is reviewed and the basis for each review: a fixed percentage, an independently published index such as CPI, a fixed amount, or current market rent (s 35). If the clause does not comply and the parties cannot agree the rent within 30 days of a written notice, a valuer appointed by the Small Business Commission sets the market rent.
- Caps are allowed. A cap on a CPI or market review, such as CPI but no more than 5%, is permitted. The Supreme Court decided this in December 2024, and the Court of Appeal refused leave to appeal in June 2026.
- Floors on market reviews are not. A clause that prevents the rent going down at a market review is void. Fixed percentage, index and fixed amount reviews are not affected by that rule.
- Other combinations. A formula such as the greater of CPI and a fixed percentage raises separate questions under s 35, so we advise on it case by case.
Options and the notice diary
Under a retail lease, an option binds the landlord to a timetable:
- at least 3 months before the last date to exercise it, the landlord must give the tenant written notice of that date, the rent for the first 12 months of the new term, and the other matters the Act requires (s 28);
- if that notice is late or incomplete, the exercise date becomes 3 months after a proper notice, and the lease continues on the same terms if needed;
- when the option is exercised, a renewal disclosure statement is due at least 21 days before the term ends (s 26);
- a validly exercised option can be refused only for a notified, unremedied default or persistent defaults the landlord has notified (s 27);
- where there is no option, the landlord must tell the tenant 6 to 12 months before the term ends whether it will offer a renewal (s 64).
Diarise on signing. Record the option window, the date the reminder notice is due, each review date and the end-of-term notice window as soon as the lease is signed. See options to renew.
Security and guarantees
Guarantees, including director guarantees, are allowed in a retail lease. A cash deposit must be held in an interest-bearing account, the landlord cannot unreasonably refuse a bank guarantee instead, and if the tenant has met its obligations the deposit must be returned within 30 days after the lease ends (s 24). On an assignment with the sale of an ongoing business, a tenant that gives an accurate assignment disclosure statement, and its guarantor, are released from liability for the incoming tenant’s obligations (s 62), so plan for fresh security. See security deposits and guarantees.
Offices, warehouses and factories
Where the Act does not apply, there is no statutory minimum term, no disclosure regime and no statutory outgoings rules, and land tax can be passed on if the lease says so. To pass on commercial and industrial property tax too, say so expressly. Two provisions of the Property Law Act 1958 (Vic) still apply:
- unless the lease expressly provides otherwise, consent to an assignment is not to be unreasonably withheld, and no fine is payable for consent apart from reasonable expenses (s 144);
- before re-entering for a breach other than non-payment of rent, the landlord must serve a notice giving the tenant a chance to remedy it, and the lease cannot exclude this (s 146).
For the retail rules in one place, see our guide to the Retail Leases Act 2003 (Vic).
How we help
- Leases for shops, offices, warehouses and factories, prepared from the agreed terms.
- Retail leasing packs: the lease, disclosure statement and outgoings estimate, prepared together so they match.
- Reviewing a standard form or an old lease before you reuse it, and option and renewal notices.
- A free 15-minute phone call first. We quote in writing before any work begins.
Common questions
Can’t see your question? Call 1800 776 529 or send us a message.
Not under a retail lease, including the cost of a mortgagee’s consent. The landlord can recover reasonable costs connected with an assignment or sublease. Under other leases, it depends on what is agreed.
Not under a retail lease: a clause making the tenant pay the landlord’s land tax or commercial and industrial property tax is void. Under a lease outside the Act, land tax can be passed on if the lease says so.
Yes. A cap on a CPI or market review is allowed. A clause that stops the rent going down at a market review is still void.
Law referred to
- Retail Leases Act 2003 (Vic) ss 4, 15, 17, 20, 21, 22, 24, 26, 27, 28, 35, 39, 41 to 45, 46, 50, 51, 62 and 64.
- Retail Leases Regulations 2023 (Vic) reg 7, Schedules 1 and 2.
- Property Law Act 1958 (Vic) ss 144 and 146.
- Commercial and Industrial Property Tax Reform Act 2024 (Vic) s 30.
- Aldi Foods Pty Ltd v Northcote Shopping Centre Pty Ltd [2024] VSC 799; Northcote Shopping Centre Pty Ltd v Aldi Foods Pty Ltd [2026] VSCA 140.
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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