ACT
See section 38. The landlord must not ask for or accept key money for the grant of the lease, extension of the lease under option, renewal, assignment, sublease or mortgage of the lease, or consent to assignment, sublease or mortgage of a lease. Key money is defined to mean an amount paid by or on behalf of a tenant to, or at the direction of, a lessor, or any benefit given to, or at the direction of, a lessor, but does not include:
- rent; or
- a payment for the goodwill or other assets of a business genuinely operated by the lessor that is sold or to be sold by the lessor to the tenant; or
- a bond or security deposit, or a guarantee by way of security; or
- an amount payable on account of outgoings; or
- a reasonable amount payable to someone for attendances on the tenant in relation to the preparation of documents that are relevant to a lease; or
- any reasonable amount payable to a lessor for goods and services provided, or to be provided, to the tenant; or
- an amount allowed to be paid under this Act.
The tenant may recover key money paid as a debt owing by the landlord.
NSW
See section 14. A person is prohibited from obtaining key money or lease preparation expenses in connection with the granting of a lease and any provision to the contrary is void.
The landlord may, however, recover a reasonable sum in respect of lease preparation expenses incurred in connection with making an amendment that was requested by the tenant. This does not apply to an amendment to insert or vary particulars of the lessee, the rent or the term, an amendment to remedy failure to include a term of the proposed lease that was agreed to be included or an amendment requested before the landlord is given a tenant disclosure statement.
This section does not prevent a landlord from securing performance of the tenant's obligations under the lease by requiring the provision of a security bond or other bond or guarantee from the tenant or any other person.
There is a penalty imposed of up to 100 penalty units if a person contravenes section 14 of the Act.
NT
See section 24. Key money is defined in section 5(1) to not only include money paid, but also "a benefit to be given" by way of a premium or something similar in nature to a premium where either there is no real consideration or it is in consideration of a benefit in connection with the granting, renewal, extension or assignment of a retail shop lease.
Key money does not include:
- payment for legal or other expenses in connection with the preparation and entering into of the retail shop lease;
- payment of rent in advance;
- bond, security deposit or guarantee;
- payment for goodwill of a business (to the extent that the goodwill is attributable to the conduct of the business by the landlord);
- payment for plant, equipment, fixtures or fittings that are sold by the landlord to the tenant; or
- payment for the grant of a franchise.
See sections 24 and 54. A landlord or person acting on behalf of a landlord must not seek or accept key money in connection with granting a retail shop lease. Maximum penalty: 100 penalty units.
A lease is void to the extent that it requires key money.
The tenant may recover key money accepted by or on behalf of the landlord as a debt owed by the landlord.
QLD
See section 39. Payment of key money or amount for tenant's goodwill is prohibited.
The landlord is not however prevented from:
- recovering from the tenant costs which the landlord reasonably incurred in investigating a proposed assignee;
- recovering the landlord's reasonable expenses incidental to an assignment and any necessary consents to the assignment;
- receiving payment of rent in advance (not exceeding the rent payable for 1 rental period under the lease);
- getting a repayable bond from the tenant to secure its obligations under the lease;
- receiving from the purchaser of the landlord's business conducted in a retail shop, payment for the goodwill of the business or plant, equipment fixtures or fittings in the shop;
- receiving payment from the tenant for amounts spent by the landlord for fitting out the shop; or
- seeking and accepting payment for the grant of a franchise in relation to the grant of the lease.
SA
See section 15. The landlord must not seek or accept payment of a premium in connection with the grant of a retail shop lease and any provision of a retail shop lease is void to the extent it requires payment of a premium.
See section 20L. The tenant cannot be required to pay a premium for the renewal or extension of a retail shop lease.
TAS
See section 9. Key money payments are prohibited. Key money is defined in section 1 to mean any money paid to or at the direction of a landlord or landlord's agent, or any benefit that is conferred on or at the direction of a landlord or landlord's agent, in connection with the granting, renewal, extension or assignment of a lease, and a reference in the Code to payment of key money includes a reference to the conferral of any such benefit.
VIC
See section 23. The landlord, a prospective landlord or any person on behalf of the landlord or prospective landlord must not seek or accept payment of key money or any consideration for the goodwill of any business carried on at the retail premises and any provision to the contrary is void. Penalty: 50 penalty units.
The landlord is not however prevented from:
- recovering from the tenant costs which the landlord reasonably incurred in investigating a proposed assignee of the lease or sub-tenant of the premises;
- recovering from the tenant costs which the landlord reasonably incurred in connection with:
- an assignment of the lease or a sub-lease; and
- obtaining any necessary consents to the assignment or sub-lease;
- claiming goodwill from the tenant in relation to the sale of a business that the landlord operated from the retail premises immediately before its sale, if the lease was granted to the tenant in the course of the sale of the business;
- receiving payment of rent in advance;
- securing the performance of the tenant's obligations under the lease by requiring a bond, security deposit or guarantee to be provided from the tenant or any other person (such as a requirement that the directors of a corporation guarantee performance of the corporation's lease obligations);
- seeking and accepting payment for plant, equipment, fixtures or fittings that are sold by the landlord to the tenant in connection with the lease being granted; or
- seeking and accepting payment for the grant of a franchise in connection with the lease being granted.
WA
See section 9. Any provision in a retail shop "lease" (as broadly defined) to the effect that the landlord or any person claiming through the landlord is entitled to or may require from the tenant:
- key money; or
- any consideration for the goodwill of any business carried on at the retail premises,
is void, and any such sum paid or benefit conferred by the tenant is recoverable by the tenant as a debt due.
Key money is defined in section 3(1) to include not only money paid, but also any benefit conferred by, or at the request or direction of, a tenant by way of a premium or something of a like nature in consideration of the granting or agreeing to grant a lease or a renewal or assignment of a retail shop lease.
In addition to any other benefits outlawed as key money, undersection 9(1a) if the tenant is required to make a payment or provide the landlord with some other benefit in consideration of a rental reduction, that payment or other benefit is taken to be key money and therefore void.
Section 9(2) permits the landlord to recover any sum:
- a tenant has agreed to pay for the goodwill of a business carried on by the landlord in the retail shop concerned immediately before the lease was entered into; or
- expenses reasonably incurred by the landlord in investigating a proposed assignee or subtenant; or
- permissible lease costs discussed above.
Definitions and currency