Is My Shop Covered by the Retail Shop Leases Act?

About to rent or lease out a store in Queensland? There is a lot to think about, but the agreement itself is a good place to start.

The question of whether or not the Retail Shop Leases Act applies to the premises or whether it fits within the broader scope of a commercial lease comes down to a few factors, including the size, the goods being sold, and where the store is located.

Broadly speaking, the lease may be covered by the Act if the leased area is no more than 1,000 square metres and is used wholly or predominantly for a defined retail business, or if the shop forms part of a qualifying retail shopping centre. However, there are exclusions which may also apply.

Key takeaways

• A number of factors determine whether a shop is covered by the Retail Shop Leases Act or if it fits into a broader commercial lease.
• The entire area included in your lease may count towards the 1,000-square-metre threshold.
• A shop can qualify through its business use or through its location in a retail shopping centre.
• Section 5A of the Act excludes several kinds of premises and leasing arrangements.
• The landlord and tenant cannot agree amongst themselves that the Act does or does not apply.
• Classification affects disclosure, rent reviews, outgoings and dispute resolution rights.

It’s important to apply the correct lease as it may affect the outcomes of the tenancy. Take a look at some questions to ask, then reach out to a commercial leasing lawyer for confirmation.

Does the shop meet the size test?

To figure out if the Retail Shop Leases Act applies instead of a more general commercial lease, start with the premises as they are described in the lease, not the part of the floor you think of as the shop itself. Anything over 1,000 square metres falls outside the Act, even where only a smaller section is used for customer-facing retail.

Are the premises used for a retail business?

A standalone shop can be covered by the Retail Shop Leasing Act when it is used wholly or predominantly for one of the retail businesses listed in Schedule 1 of the Retail Shop Leases Regulation 2016. The list includes cafes, restaurants, hairdressers, beauty salons, florists, clothing stores, butchers and bakeries.

The real question to ask:

Does the main business carried on at the premises fall within the statutory definition of retail?

Gyms, medical practices, offices, warehouses, wholesalers and many other customer-facing businesses are not automatically treated as retail businesses under Queensland law.

However, there are exceptions…

Is the shop inside a retail shopping centre?

A non-retail business can still hold a retail shop lease if it operates inside a qualifying retail shopping centre (and is under the size limit).

The Act generally looks for a cluster of at least five premises used for retail businesses. Those premises also need to meet ownership or control requirements, and the centre must be promoted or generally regarded as a shopping centre, mall, court or arcade.

This is where things can become complicated because shopping centres change, tenancy mixes shift, and the shop might sit on its own level away from everything else.

Layout, ownership structure and what the neighbouring premises are used for can all push the answer of whether the Retail Shop Leases Act applies one way or the other.

Speaking with a commercial lease lawyer is recommended to confirm whether the Act applies.

Do any section 5A exclusions apply?

Even where the earlier tests seem to fit, section 5A can change the lease parameters again. As explained in the legislation, common examples include:

• Premises larger than 1,000 square metres
• Some non-retail premises on a level where retail businesses occupy 25 per cent or less of the total lettable area
• Certain premises in theme parks, flea markets, arts and craft markets or the South Bank Corporation area
• Temporary stalls at agricultural shows, festivals, carnivals or cultural events

Other exclusions can apply, so treat this as a first check rather than a final answer.

Understanding your rights

A Retail Shop Lease is regulated differently from a commercial lease in Queensland and the requirements of the agreement tend to be more rigid.

If the Retail Shop Leases Act applies to the property you lease, there are statutory protections covering pre-lease disclosure, rent review methods, recoverable outgoings, renewal notices and access to the retail tenancy dispute process.

For landlords, getting the classification wrong is expensive because it can lead to defective disclosure, penalties, compensation claims or a tenant seeking to terminate in circumstances the Act allows.

It’s also important for tenants to understand their obligations and the terms they are agreeing to.

Once you know which framework you are working within, our Commercial Leasing Guide for Queensland Landlords sets out other obligations that follow.

Get advice about your retail shop lease

The wording of the lease, the premises, the business use and the legislation decide whether a commercial property is covered by the Retail Shop Leases Act.

If you are not sure whether it applies to a place you are leasing or want to let to a retailer, NPR Law’s commercial lease specialists can review your documents and recommend the right lease and terms.

Understanding Qld’s Retail Shop Leases Act: NPR Law can help

If you have any questions or would like expert assistance to ensure you fully comply with all the legal requirements of a commercial lease, call us on 07 3555 6333 or contact our commercial leasing specialists here.