In a significant development for both landlords and tenants of retail shop leases in South Australia, the prescribed threshold for annual rent under the Retail and Commercial Leases Act 1995 (SA) (Act) has been increased. This change, introduced through the Retail and Commercial Leases (Prescribed Threshold) Amendment Regulations 2024, will take effect from 1 July 2025. This amendment raises the rent cap that determines whether a retail shop lease falls within the scope of the Act.
Prescribed Threshold under Section 3(1a) of the Act
Section 3(1a) of the Act defines the "prescribed threshold" in relation to rent payable under a retail shop lease. The provision states:
“prescribed threshold”, in relation to rent payable under a retail shop lease, means—
(a) the amount of $400 000 per annum exclusive of GST; or
(b) if a greater amount is prescribed by the regulations for the purposes of this definition and the Act—the amount so prescribed.
This threshold plays a critical role in determining whether the statutory protections afforded to tenants under the Act apply to a retail shop lease. Where the annual rent payable exceeds the prescribed threshold, the lease will fall outside the application of the Act, subject to any other applicable exclusions under the Act.
Regulations
In accordance with the statutory mechanism allowing for the adjustment of the prescribed threshold by regulation, the Retail and Commercial Leases Regulations 2010 have been amended through the insertion of a new regulation 3A. The new provision states:
“For the purposes of the definition of prescribed threshold in section 3(1a) of the Act, the amount of $420,000 per annum exclusive of GST is prescribed.”
This amendment increases the annual rent threshold from $400,000 per annum to $420,000 per annum (exclusive of GST) for the purpose of section 3(1a) of the Act.
Commencement
The increased rent threshold is scheduled to come into operation on 1 July 2025. Until that date, the current prescribed threshold of $400,000 per annum (exclusive of GST) will continue to apply.
Implications for Landlords and Tenants
From 1 July 2025, retail shop leases with an annual rent exceeding $420,000 (exclusive of GST) will fall outside the scope of the Act, subject to any other applicable exclusions under the Act. Notably, this change will apply to both new and existing leases. Leases that were previously excluded from the Act due to rent exceeding the current $400,000 per annum (exclusive of GST) threshold may now fall within its scope if the annual rent payable from 1 July 2025 does not exceed the revised $420,000 threshold—again, subject to any other exclusions under the Act.
Landlords and tenants are encouraged to review their leasing arrangements to assess how these changes may affect their rights and obligations under the updated statutory framework.
How We Can Help
Our team has extensive experience advising both landlords and tenants on the application of the Retail and Commercial Leases Act 1995 (SA) and the implications of regulatory changes. We can assist you in reviewing your current leasing arrangements, assessing whether your leases fall within or outside the scope of the Act under the updated threshold, and advising on any necessary amendments or compliance steps. For further information, please contact Michael Stannard directly, email us at [email protected], or call (08) 8414 3400.