The Retail and Commercial Leases Act 1995 (SA) (RCLA) has seen some significant changes brought in over recent years. A number of amendments commenced on 1 July 2020, affecting lessees and lessors in retail shops and commercial tenancies across South Australia.
The RCLA was amended to clarify that the rent threshold (currently $400,000) is to be calculated excluding GST. This threshold will be regularly reviewed; at first by 30 October 2022, and every 5 years thereafter.
Exemptions were also made regarding leases where the rent payable per annum (p/a) exceeds the threshold. Existing or renewed leases that are subsequently lowered to meet the new prescribed threshold may now be exempt from the RCLA. The exemption also applies to further reviews of the threshold. As a general rule, existing leases will not be affected by subsequent changes to the threshold that may be made during the life of that lease.
There are additional criteria the lease agreement needs to meet in order for the exemption to apply.
s.4(3)(a) RCLA – For registered leases with rent over the rent threshold:
- The lease must be lodged for registration by the landlord and within 3 months of signing;
- The landlord must provide written notification of lodgement within one month of lodgement to the tenant;
- The lease must remain registered for the life of the lease; and
- The rent exceeds the prescribed threshold when the lease is lodged for registration.
s.4(3)(b) RCLA – If the exemption applies, then the exemption also applies to a renewal of the exempt lease, provided that:
- The renewal is lodged for registration by the landlord and within 2 months of the previous term expiring;
- The landlord provides written notification of lodgement of the renewal within one month of lodgement to the tenant; and
- The renewal remains registered for the life of the renewal.
These changes will impact many South Australian businesses, especially tenancies affected by COVID-19. These include tenants who may have seen a decrease in revenue operating with lease terms that include a percentage rent factor.
Perhaps you’re a tenant looking to understand how these changes will affect your lease agreement, or maybe you’re a landlord looking to be in the best position with a new lease agreement, in light of these changes.
Wadlow Solicitors are here to help draft and review your lease agreement, with respect to the recent changes to the RCLA. If you’d like to learn more about the implications of these changes to your needs, call Wadlow Solicitors on (08) 8212 2955.
