Retail leases in Victoria: what tenants must check before signing

For most Victorian small businesses, the lease is the biggest contract they will ever sign — a five-figure annual commitment that can outlast the business itself. Retail tenants get significant statutory protection, but only the tenants who know it exists. Here is what the Retail Leases Act 2003 (Vic) actually does for you, and what to check before you sign anything.

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 disclosure statement — rent, outgoings estimates, term, options, works, incentives — 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.

Term and options: the five-year floor

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. 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 but the risk of the calendar remains with you. On renewal rent, the Act regulates market reviews and gives tenants a process for early rent determination before committing.

Money beyond the rent

• Land tax cannot be passed on. Under a Victorian retail lease, the landlord cannot recover land tax from the tenant — 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 (CPI, fixed percentage, market) and beware ratchet clauses purporting to stop rent falling — the Act restricts them.
• 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: tenants ordinarily maintain, landlords ordinarily fix structure — but drafting varies, 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 to a defined standard (or a payment) now, 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's consent cannot be unreasonably withheld for a compliant assignee, 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 genuinely tenant-accessible — 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 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 notify you before the end of the term whether a renewal is offered — but it does not compel one, which is why options are negotiated hard at the start.

Who pays for repairs to air-conditioning and equipment? The lease decides, within the Act's limits — landlords generally cannot pass through capital costs, and essential safety measure obligations have specific rules. 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 — before signature.

Before you sign: a ten-minute discipline

Send us the proposed lease and disclosure statement before you commit. A fixed-fee review 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.

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