Retail leases in Victoria: what tenants must check before signing

Before signing a retail lease in Victoria, check whether the Retail Leases Act 2003 applies, that you received a disclosure statement at least 14 days before entering the lease, that the term generally runs at least five years counting options, and what the outgoings, rent review, make-good and guarantee clauses commit you to. The Act's protections work best asserted before signature, so we review leases before you commit.

In this article

1. Does the Act cover your lease?
2. The disclosure statement: your due-diligence document
3. How long must a retail lease run in Victoria?
4. What does a retail tenant pay beyond the rent?
5. Fit-out, repairs and make-good
6. Assignment: selling the business means assigning the lease
7. When disputes come: the VSBC first
8. Tenant questions we answer weekly
9. Before you sign: a ten-minute discipline
10. The bottom line

Does the Act cover your lease?

The Act applies to premises used wholly or predominantly for the retail provision of goods or services, a definition broader than shopfronts, reaching many service businesses, clinics and offices that "retail" services to the public. Exclusions exist: notably premises with very large occupancy costs, certain listed-company tenants, and some short arrangements. Whether the Act applies changes your rights dramatically, so it is the first question we answer when reviewing a lease, and landlords are sometimes wrong about it in their own documents.

The disclosure statement: your due-diligence document

A landlord must give a prospective retail tenant a copy of the proposed lease and the Victorian Small Business Commission's information brochure for tenants as soon as negotiations begin, and then a disclosure statement covering rent, outgoings estimates, term, options, works and incentives, together with a copy of the proposed lease, at least 14 days before the lease is entered into. Late or defective disclosure gives the tenant real remedies, including rights to withhold rent in defined circumstances or walk away early in the lease. Never treat the disclosure statement as a formality: it is the document you will hold the landlord to when the "estimated" outgoings double, and the form on the Victorian Small Business Commission website shows what a complete one must contain.

How long must a retail lease run in Victoria?

Retail tenants are generally entitled to a minimum five year term, counting any options, a protection against building a business on a two year lease. A tenant can give up that protection only by asking the Victorian Small Business Commission for a waiver certificate and giving a copy to the landlord, so if a landlord proposes a shorter lease and asks you to obtain one, understand what the certificate does before you request it. Options to renew are the tenant's asset: diarise the exercise window religiously, because a missed option date can end a profitable business's tenure, and landlords must give notice of the last date; if that notice comes late, the last date moves to three months after it is given, but it is safer not to rely on the landlord's notice. On renewal rent, the Act regulates market reviews and gives tenants a process for early rent determination before committing.

What does a retail tenant pay beyond the rent?

• Land tax cannot be passed on. Under a Victorian retail lease, the landlord cannot recover land tax from the tenant, and the same ban now covers Victoria's newer commercial and industrial property tax, a saving worth thousands annually that non retail tenants do not enjoy.
• Outgoings must be estimated in advance and reconciled with audited-style statements; categories not disclosed are not recoverable.
• Rent reviews: check the method, whether CPI, a fixed percentage or market, and beware ratchet clauses purporting to stop rent falling on a market review: the Act makes such a clause void.
• Security: bonds and bank guarantees should be sized sensibly and returned promptly at exit; personal guarantees deserve their own negotiation: see our note on guarantees and debt exposure.

Fit-out, repairs and make-good

Three clauses decide who pays for the space itself. Fit-out: document precisely what the landlord contributes and who owns the works. Repairs: the Act makes the landlord responsible for maintaining the structure, fixtures, plant and equipment, and the landlord's fittings for services such as gas, electricity and water, in the condition they were in when the lease was entered into, and a clause shifting that duty onto the tenant is void. The duty does not extend to damage from the tenant's own misuse, or to items the tenant may or must remove at the end of the lease. The landlord can recover ordinary repair costs as outgoings only where the lease provides for it, generally cannot recover capital costs at all, and essential safety measure costs have their own rules. Make-good: the obligation to strip the premises back at exit is the sleeper liability of retail leasing; negotiate it now to a defined standard, or to a payment instead, because "return to original condition" invoiced by the landlord's builder after you have left is the most expensive version.

Assignment: selling the business means assigning the lease

Most business sales include the lease, and the Act structures the process: the landlord can withhold consent only on grounds the Act lists, such as its view that the assignee lacks the finances or business experience for the lease, and the outgoing tenant who follows the disclosure procedure can be released from ongoing liability after assignment. Skipping the procedure leaves you guaranteeing a stranger's rent for years, a mistake we see cleaned up expensively.

When disputes come: the VSBC first

Retail lease disputes in Victoria go first to the Victorian Small Business Commission, whose low-cost mediation resolves the large majority of matters without litigation; VCAT hears what mediation cannot settle. The regime is accessible to tenants, but outcomes still follow the documents, which is why the lease and disclosure statement you sign today decide the dispute you might have in year four.

Tenant questions we answer weekly

The landlord says my office is not "retail". Are they right?

Not necessarily. Victorian courts and tribunals have taken a broad view of retail services, and plenty of professional and service premises fall under the Act despite lease documents that assume otherwise. The answer changes your rights on land tax, outgoings and disclosure, so it is worth an actual opinion.

Can the landlord refuse to renew my lease?

If you hold an option, exercising it in time binds the landlord. Without an option, the Act requires the landlord to tell you in writing, at least six months and no more than twelve months before the term ends, whether a renewal is offered and on what terms. If the landlord is late, the lease continues on the same terms until at least six months after that notice is finally given. The Act does not compel a renewal, which is why options are negotiated hard at the start.

Who pays for repairs to air-conditioning and equipment?

The landlord, in most cases. The Act makes the landlord responsible for maintaining the structure, fixtures, plant and equipment in the condition they were in when the lease was entered into, and a lease cannot shift that duty to the tenant. The duty does not cover damage from the tenant's own misuse, or items the tenant may or must remove at the end of the lease. The landlord can recover ordinary repair costs as outgoings only where the lease provides for it, and generally cannot recover capital costs at all, with specific rules for essential safety measures. If an urgent fault is substantially affecting your business and the landlord will not act despite your reasonable efforts, you can arrange the repair yourself, give the landlord written notice of it and its cost within 14 days, and the landlord must reimburse the reasonable cost. Read the repair clause against the outgoings schedule before signing; that intersection is where surprise invoices live.

I have personally guaranteed the lease. How exposed am I?

Typically for the tenant company's obligations for the whole term, unless negotiated down. Caps, expiry on assignment, and bank guarantees in substitution are all negotiable, so raise them before signature.

Before you sign: a ten-minute discipline

Send us the proposed lease and disclosure statement before you commit. Our lease review for a tenant is from $1,089 including GST, as our fees page sets out, and it tells you whether the Act applies, what the true annual occupancy cost is, which clauses need negotiation, and where the exit doors are. It is the cheapest insurance in commercial law. Details at our commercial law page, and see the contracts every Victorian business should have for the rest of your paperwork.

The bottom line

Victorian retail tenants enjoy some of the strongest leasing protections in the country, but every one of them works better asserted before signature than litigated after. Read the disclosure statement like the financial document it is, negotiate the exit clauses while you have leverage, and never let an option date pass unwatched.

Sources: Retail Leases Act 2003 (Vic).

This guide reflects the law applying in Victoria as at September 2026. It is general information only, not legal advice, and does not take your circumstances into account.