Key Differences Between Retail And Commercial Leases In Australia

Understanding the differences between retail and commercial leases is essential in property leasing, especially in the context of Australian retail lease management. While both leases involve renting space for business purposes, they differ significantly in their scope, regulations, and implications for landlords and tenants.

Let us take a closer look at the main differences between these types of property rentals.

Purpose Of Use

The primary difference between retail and commercial leases lies in what the lease premise will be used for. Retail leases are for businesses that sell goods or services to the public, such as shops, restaurants, and cafes. On the other hand, commercial leases are more general and can be used by a wide range of businesses, including offices, warehouses, and factories.

Legislation Differences

Retail leases are subject to specific legislation in each Australian state and territory, such as the Retail Leases Act. These laws aim to protect retail tenants, including minimum lease terms, landlords’ compulsory disclosure of certain information, and restrictions on the landlord’s ability to pass on certain costs to tenants.

While still subject to general leasing laws like the Property Law Act, commercial leases are less heavily regulated than retail leases. Lessees are encouraged to negotiate terms carefully, as these will largely determine the provisions that relate to them.

Lease Terms

Retail leases generally have longer minimum lease terms than commercial leases. In some states, retail leases are required to have a minimum term of five years, while commercial leases may have shorter terms or even be month-to-month.

These longer terms are designed to provide better stability for retail tenants but also require much greater commitment and obligation.

Transference Of Costs

Tenants in retail leases are generally responsible for the rental payment plus additional costs such as council rates, utilities, and insurance.

Commercial leases could either include these costs in the rental or require the tenant to pay them separately.

Dispute Resolution

Disputes between landlords and retail tenants are resolved through specific procedures, such as the retail tenancy division of the relevant state tribunal. In contrast, commercial lease rights and disputes are governed and resolved through general civil litigation processes.

Contact us today for assistance with all types of Australian retail lease management issues. The LeaseWise Group are specialist retail property consultants and tenancy advocates, representing small to medium-sized retailers nationally since 1998.