Retail And Commercial Leases Act: Key Rules For Leasing Business Premises

If you’re leasing premises for your small business, it can feel like the lease is just another “tick-the-box” document to sign before you open your doors.

But your lease is often one of the biggest financial and legal commitments your business will make. It affects your rent, your outgoings, your fit-out, your hours of trade, your ability to sell the business, and what happens if things don’t go to plan.

When people search for the “retail and commercial leases act”, they’re usually trying to answer one practical question: what laws apply to my lease and what protections do I actually have?

In Australia, there isn’t one single “Retail And Commercial Leases Act” that applies nationally. Instead, retail leasing is mainly regulated by state and territory retail leases legislation (for example, the Retail Leases Act in your state), and commercial (non-retail) leasing is generally governed by your lease terms plus general contract principles.

This guide breaks it down in plain English so you can lease your premises with confidence and avoid common traps.

Note: This article is general information only and doesn’t constitute legal advice. Retail leasing laws and outcomes can vary depending on your state or territory, the type of premises, the business carried on, and the terms you negotiate.

What Does The “Retail And Commercial Leases Act” Mean In Australia?

In practice, when people refer to the “retail and commercial leases act”, they’re usually using shorthand for two things:

• Retail leasing legislation in your state/territory (which can give eligible small business tenants additional protections).
• The rules that apply to commercial leasing more broadly (which often depend heavily on what you negotiate in the lease).

The first step is working out whether your lease is a retail lease or a commercial lease.

What Is A Retail Lease?

A retail lease is generally a lease where the premises are used for a business that sells goods or services to the public, and the lease falls within the scope of your state or territory’s retail leasing laws.

Many businesses in shopping centres or strip shops are retail tenants, but it isn’t limited to fashion stores. Depending on your state or territory (and any exclusions, size tests, or turnover/rent thresholds that apply), it can include things like:

• cafes and takeaway food shops
• beauty and personal services
• health and wellness services
• repair services or specialty services

Whether your lease is a “retail lease” can depend on factors like the type of business, how the premises is used, where it is located (for example, within a retail shopping centre), and sometimes the size of the premises or rent thresholds.

What Is A Commercial Lease?

A commercial lease is a broad category. It usually means a lease of business premises that does not fall under the retail leasing legislation.

Common examples include:

• warehouses and industrial units
• office space (depending on the circumstances)
• manufacturing premises
• some medical and allied health suites

Commercial leases can still be negotiated, but you typically won’t have the same mandatory protections that apply under retail leasing legislation.

Why this matters: if you assume you’re covered by retail lease protections when you’re not, you can miss key risks (like rent review methods, outgoings, or strict make-good obligations).

Retail Vs Commercial Leases: What Protections Might Apply To You?

Retail leasing legislation is designed to address the power imbalance that often exists between landlords and small business tenants.

While each state and territory is different (and not every lease or premises is covered), retail lease laws commonly deal with issues like:

• Disclosure obligations (for example, landlords providing a disclosure statement before you sign).
• Rules about certain lease clauses (some terms may be restricted or void).
• Minimum lease terms and renewal rights in some cases.
• Rent review rules (for example, restrictions on “ratchet clauses” in some jurisdictions).
• Outgoings transparency (how outgoings are estimated, charged, and reconciled).
• Dispute resolution processes (often requiring mediation before court).

Commercial leases are usually more “contract-driven”. That means your rights and obligations can come down to what’s written in the lease, what was negotiated, and how the courts interpret the contract if a dispute arises.

That doesn’t mean commercial tenants are unprotected. You still have rights under general law (for example, misleading or deceptive conduct principles and contract law basics), but the practical protection often comes from negotiating strong terms and understanding what you’re committing to before you sign.

If you’re unsure whether your lease is retail or commercial, it’s worth getting advice before you commit. A “standard” lease can still be high-risk if it’s not fit for your business model.

Key Lease Terms Small Businesses Should Negotiate (Before You Sign)

Most lease disputes happen because the business owner didn’t realise what the lease actually required until later - often when cashflow is tight, the landlord relationship has deteriorated, or you need to exit.

Below are some of the biggest clauses to focus on early.

Rent, Rent Reviews And Incentives

Ask yourself:

• Is the rent fixed, CPI-linked, market review, or a mix?
• Can rent only increase (a “ratchet”) or can it also decrease on market review?
• Are incentives (like rent-free periods) documented clearly?

Rent review drafting is one of the most technical parts of leasing. A small wording change can significantly affect what you pay over the term.

Outgoings (The “Hidden” Costs)

Outgoings can include things like council rates, water, building insurance, cleaning, and centre management fees.

Key questions:

• What outgoings are you responsible for?
• Are they capped or can they increase each year?
• How are they calculated and reconciled?

In retail leasing, disclosure requirements often help you assess outgoings before signing. In commercial leasing, you usually need to be even more proactive about clarifying these costs upfront.

Permitted Use (Can You Actually Run Your Business?)

The “permitted use” clause controls what you’re allowed to do in the premises.

This matters if you plan to evolve your offering over time (for example, adding a new service line, selling different products, or expanding into online fulfilment from the premises).

If the permitted use is too narrow, you can end up stuck - or in breach - even though you’re still running a legitimate business.

Fit-Out, Alterations And Approvals

Fit-outs can be a major cost. Your lease will usually set rules on:

• who owns the fit-out
• what approvals you need from the landlord
• who is responsible for compliance (for example, building approvals)
• what happens at the end of the lease

Try to align these rules with your launch timeline and budget, and make sure any landlord promises are documented.

Repairs, Maintenance And Make-Good

Make-good is what you must do when you leave: restore the premises, remove your fit-out, repaint, recarpet, and so on.

This is one of the biggest “surprise bills” for small businesses when they exit a premises.

Look closely at:

• what condition the premises must be returned in
• whether you must remove fixtures and signage
• who pays for building works

Assignment And Subleasing (If You Sell The Business Or Need To Exit)

If you plan to sell your business later, the lease needs to be transferable. Many leases include strict conditions around assignment (transfer to a buyer) or subleasing.

Where a landlord agrees to transfer the lease to a new tenant, this is often documented through a Deed of Assignment of Lease.

From a practical perspective, you want a lease that doesn’t make selling your business harder than it needs to be.

Common Compliance Traps Under Retail And Commercial Lease Rules

Even if you’ve negotiated a good deal, day-to-day compliance matters. Some lease breaches are easy to trigger, and they can give the landlord serious rights (including termination in some circumstances).

Not Having The Right Document (Or Having No Lease At All)

Sometimes you’re offered “heads of agreement” or a short email confirmation to move in quickly. While that may feel convenient, the risk is you’re operating without clear terms around rent, outgoings, repairs, and exit rights.

If you’re currently trading without a signed lease, it’s worth understanding the risks early - no lease agreement situations can create uncertainty and limit your negotiating position later.

Missing Notice Requirements (Renewal, Termination, Or Vacating)

Leases are formal documents, and timing matters. If you miss a notice deadline, you can lose renewal options or trigger holdover (continuing month-to-month on less favourable terms).

If you’re approaching the end of your lease or need to exit, the notice provisions are critical - including any notice to vacate requirements that apply to your situation.

Misunderstanding “Outgoings” And Reconciliations

A common issue is budgeting for rent but not budgeting for outgoings (or not understanding that the landlord may issue an annual reconciliation and require you to pay a shortfall).

Make sure your bookkeeping and cashflow forecasting treats outgoings as a core part of occupancy costs, not an occasional surprise.

Breaching The Permitted Use Or Trading Hours Rules

In shopping centres and some precincts, leases can include mandatory trading hours. Some landlords can issue breach notices if you don’t open during required times, even if trade is quiet.

Similarly, if you start offering new products or services outside the permitted use, you may need landlord consent or a formal variation.

Practical Steps Before You Sign A Lease (A Small Business Checklist)

If you’re about to sign a retail or commercial lease, a little structure goes a long way. Here’s a practical checklist you can use to reduce risk.

1. Confirm Whether It’s Retail Or Commercial

Ask directly whether the landlord considers the lease to be a retail lease and which legislation applies. If it’s unclear, get advice before you sign.

2. Make Sure The Key Deal Terms Are In Writing

If you negotiated incentives, contributions, early access for fit-out, or specific repairs, make sure they are included in the formal lease documents.

3. Review The Lease With Your Business Model In Mind

A lease that suits a professional office may not suit a hospitality venue. Think about:

• noise and neighbours
• waste management
• signage and branding
• deliveries and access
• food safety or industry-specific approvals (where relevant)

4. Understand Your Exit Options Early

Even if you’re confident your business will succeed, it’s smart to plan for contingencies:

• Can you assign the lease to a buyer?
• Can you sublease part of the premises?
• Is there a break clause?
• What happens if you need to relocate?

If you’re already in a lease and considering your options, issues like breaking a commercial lease agreement can get complex quickly, especially when personal guarantees are involved.

5. Get The Documents Right (Not Just The “Main Lease”)

Depending on your arrangement, you might be entering into:

• a full lease
• a sublease
• a licence arrangement (common in shared spaces)

If you’re operating in a shared workspace, a pop-up, or a “rent a room” style setup, you may need a Property Licence Agreement rather than a traditional lease.

6. Consider A Legal Review Before You Commit

A lease is usually drafted to protect the landlord. That’s not necessarily “bad” - it’s just reality. A review can help you identify clauses that don’t match your risk appetite, and negotiate changes while you still have leverage.

For many small businesses, a Commercial Lease Review is a practical way to understand what you’re signing and what you should push back on.

Key Takeaways

• The “retail and commercial leases act” is often used as shorthand, but in Australia retail leasing is governed by state/territory legislation (with important exclusions and differences between jurisdictions), while commercial leases are usually governed by contract terms and general law.
• Your first priority is confirming whether your lease is a retail lease or commercial lease, because this can change what disclosures and protections apply.
• Key clauses to focus on include rent reviews, outgoings, permitted use, fit-out obligations, repairs/make-good, and assignment/subleasing rights.
• Common traps include operating without a signed lease, missing notice deadlines, underestimating outgoings, and unintentionally breaching permitted use or trading hours clauses.
• A simple pre-signing checklist (confirm lease type, document deal terms, assess exit options, and review documents) can save you major cost and stress later.
• Getting advice before you sign is often the easiest time to negotiate better terms and protect your business’s long-term flexibility.

If you’d like a consultation about your retail or commercial lease, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.