Security deposits (bonds)

Under new changes, a landlord must return the deposit to their tenant within 30 days of the lease ending if the tenant has met their obligations, giving more certainty than the previous requirement of ‘as soon as practicable.’

Disclosure statements

A landlord must now give their tenant a disclosure statement and copy of the proposed lease no later than 14 days before the lease is entered into (instead of the previous seven-day period). The landlord must also notify their tenant of any changes to the lease no later than 14 days before it’s extended.

Notification of option to renew, early rent review and cooling off

A landlord must now notify their tenant at least three months before the option date of the:

• Date by which the option can be exercised
• Rent for the first 12 months
• Availability of an early rent review and cooling off period – tenants now have 14 days after the option has been exercised to consider the terms and conditions, which is twice as long as the previous time allowed.

These changes were made as result of recommendations made by the Small Business Regulation Review undertaken in 2019.

Essential safety measures

A landlord can now pass on to their tenant the costs of repairing, maintaining and installing as part of a fit-out, essential safety measures (ESM). This can only happen in instances where the lease and disclosure statement or annual estimate of outgoings require the tenant to do so.

ESM include smoke detectors, sprinkler systems, fire extinguishers, fire exit signs and annual safety inspections.

This amendment will maintain the status quo in retail leasing industry practices that existed before uncertainty created by a VCAT Advisory Opinion.

These changes apply to new and existing leases; however, they do not enable a landlord to recover ESM costs that they have already paid.

Further information

Further information on these changes and the recently extended Commercial Tenancy Relief Scheme, (including access to free mediation and support), is available from the Victorian Small Business Commissioner’s website.