The Act has been amended by inserting a provision that makes a ratchet clause in a retail shop lease void. A ratchet rent provision is defined as any provision of a retail shop lease that:
- Prevents, or enables the lessor or another person to prevent, the rent decreasing under a rent review; or
- Limits or specifies, or allows the limitation or specification of, the amount by which the rent may decrease under a rent review; or
- Prevents, or allows the avoidance of, the rent review by the lessor or another person for a purpose mentioned in paragraph (a) or (b).
Any retail shop lease which contains such a provision is void where the lease is entered into on or after 4 April 2011.
The amendment has been passed to close a loophole created by the Court of Appeal which upheld the validity of a ratchet clause in a retail shop lease which prevented rent decreasing.
All Queensland landlords of retail shops will need to review their rent review clauses in leases entered into from 4 April 2011.
For more information about the amendments to the retail shop leases act 1994 read our blog Queensland Business Law Today.
If you have questions regarding retail shop leases don’t hesitate to contact Tom Wood +61 (07) 5443 6600.
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