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Addition of gyms and small bars to definition of ‘retail shops’ under the Retail Leases Act 1994 (NSW)

January 31, 2023
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By Nasiya Goldberg, Senior Associate

As of 1 January 2023, the Retail Leases Regulation 2022 (NSW) (‘Regulation’) will be expanding the application of the Retail Leases Act 1994 (NSW) (‘Act’) to include the following new categories under the definition of ‘retail shop’ business:

  • Gymnasiums;
  • Fitness centres, including yoga, barre, pilates and dance studios; and
  • Small bars with a maximum patron capacity of 120.

This means from 1 January 2023, any leases that are entered into where the permitted use falls into one of the new categories above will now be subject to the statutory requirements and protections under the Act.  This is irrespective of whether these businesses are located in a retail shopping centre, retail shopping strip, stand-alone premises and even industrial business estates.

The existing exclusions and limits to the definition of ‘retail shops’ under the Act (such as premises with a lettable area of >1,000 metres and leases of terms greater than 25 years) will apply to the new categories.  For example:

  • A large-format fitness centre with a lettable area of 1,200 metres will not be subject to the Act;
  • A gym in a suburban shopping strip with a lettable area of 300m will be subject to the Act (subject to any other statutory exclusions).

Take-aways:

Landlords and tenants should take note of the following key takeaways from the changes to the definition of ‘retail shop’:

  • Leases to tenants operating gyms, fitness centres and small bars will now be subject to the Act (subject to any other statutory exclusions).
  • Landlords should seek legal advice as early as possible when considering leasing premises to retail businesses to ensure compliance with the statutory requirements under the Act, including providing a Disclosure Statement to applicable tenants and limiting recovery of prohibited building outgoings from retail tenants.
  • Tenants should seek legal advice as early as possible when negotiating lease terms as we can assist in ensuring your leasing documentation reflects the commercially agreed terms and your rights under the Act.

The MST Property and Leasing team remain available to assist you with your property and leasing queries.  Please contact Nasiya Goldberg, Senior Associate on (03) 8540 0727 or Evelyn Marcou, Principal on (03) 8540 0243.

Useful links

The complete list of businesses in the Regulation can be accessed by clicking on this link: Retail Leases Regulation 2022 – NSW Legislation

The NSW Small Business Commissioner Factsheet on the Regulation can be accessed by clicking on this link: Retail Leases Act fact sheet.pdf (nsw.gov.au)

Disclaimer

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. MST Lawyers has no affiliation with the NSW Small Business Commissioner.

If you require any assistance, please contact Nasiya Goldberg on  nasiya.goldberg@mst.com.au.



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