The new Retail Leases Act 2003 (Vic), which applies to all leases entered into on or after 1 May 2003 (including renewals of existing leases), revamps Victoria's retail tenancies laws. There are some significant changes to procedures and standard documentation in relation to retail tenancies and it is important that you seek legal advice on how these changes will affect you as a landlord or retail tenant.

As a landlord, you may find that the new legislation provides more onerous disclosure provisions and greater regulation of retail leases. As a tenant, you may find that the legislation offers you better protection in the areas of rent reviews, repairs and relocation procedures, as well as the benefits of earlier disclosure requirements.

Points to note about the new Act include:

• Application - the legislation applies to leases of 'retail premises' but does not include premises where the occupancy costs (rent plus outgoings) exceeds a prescribed amount (set at $1,000,000). The introduction of this cost cap test replaces the complicated formula of applicability based on 'lettable floor area' (1000square metres or less). In addition, the Act does not apply to shopping centre retailers.
  
• The Act prescribes a formula for calculating market rent reviews and giving notice in relation to them. The Act also precludes recovery by landlords for specified outgoings including land tax and capital costs, with estimates of outgoings needing to be provided to a tenant before entering into the lease and at least one month before the commencement of each outgoings period.

The Act also outlines procedures and requirements in relation to building alterations and tenants' compensation rights, relocation provisions, and dispute resolution.

It is important that you understand your rights and obligations when entering into a retail leasing relationship - as a landlord or a tenant. The Retail Leases Act 2003 (Vic) is prescriptive in nature and it would be prudent for any potential landlord or tenant to seek legal advice to ensure compliance with its many complex provisions.