ACT
See section 47. A lease provision is void if it allows a change to rent more than once in each year after the first anniversary of the lease, except where the provision:
- allows the sub landlord to pass on to the subtenant rent increases under a head lease;
- sets out the steps by which rent will increase at predetermined times during the lease;
- allows for changes to rent attributable to GST;
- allows for abatement of rent;
- allows review of rent on the exercise of an option to extend the lease; and
- allows for adjustment to turnover rent under section 63.
See section 50. Any purported rent change is void if the lease does not:
- state the date each rent review is due; or
- provide a mechanism so the date of each rent review can be easily worked out.
NSW
See section 18. Rent reviews cannot take place more than once a year. This restriction applies, for example, to market rent reviews, but not to reviews by a specified amount or specified percentage. In addition, a provision of a lease is void if it reserves to one party a discretion as to which of two or more methods of calculating a change to base rate is to apply, or the discretion to elect whether or not rent is to be reviewed on a review date, or provides for rent to be changed to the higher of two or more specified methods.
Ratchet provisions or provisions limiting the amount of a decrease in rent are prohibited.
NT
See section 28. Leases must state when reviews are to take place and the basis or formula upon which those reviews are to be made. The basis or formula is to be by fixed percentage, independently published index of prices or wages, a fixed annual amount, the current market rent or a basis or formula prescribed by Regulations. A rent review provision that does not specify how the review is to be made is void.
Ratchet provisions which prevent or limit the amount by which rent can be reduced are void, but the basis for review may provide for increases by fixed percentages or fixed amounts.
If a review is not initiated by a landlord within 90 days of the due date, the tenant may initiate a review.
If a provision in a retail shop lease provides for review of rent but is not a basis or formula permitted under the Act, the rent to be paid is as agreed between the landlord and tenant, or if there is no agreement within 30 days after either party gives the other a written notice specifying an amount of rent for the purposes of the review - the amount determined as the current market rent of the retail premises by a specialist retail valuer appointed by the Commissioner. The landlord and the tenant must share the cost of the valuation in equal shares.
QLD
See sections 27, 28, 36 and 36A. The lease must state timing and bases of reviews. Reviews may be made only once a year (except the first year) and can be made on different bases during the term of the lease. The bases may comprise one method (eg. CPI) or a combination of two or more methods limited to the following: Current Market Rent (CMR), Index (ie. CPI), Fixed Percentage, Actual Amount and any other basis prescribed by regulation.
The Act also allows rent to be reviewed to the average of the base and turnover rents payable during the previous year/s and caps on rent increases.
Ratchet provisions and requirements for the rent to be calculated on the higher of two or more bases are void or invalid as are provisions allowing a party the discretion to decide which of two or more methods should be used.
If an invalid review occurs, the outcome will depend on the breach, eg. reviews to the higher of two bases allow the tenant to choose the basis.
The limitation on review methods does not apply to major lessees provided written notice is received from the tenant before the lease is entered into, that the tenant obtained appropriate financial and legal advice. A major lessee may agree to a ratchet provision and must provide appropriate notices under section 27(8) before entering into the lease.
SA
See section 22. Review provisions are void in a similar fashion to NSW.
TAS
See section 12. The lease must state the method by which rent is to be adjusted. Adjustments are not permitted during the first 12 months of a lease or more frequently than once in each 12 month period. The lease must specify the date for each adjustment of rent otherwise an adjustment cannot be made. The method of adjustment is confined to one of the following methods:
- CPI (All Groups Hobart) or other agreed CPI Index;
- agreed percentage;
- current market value rent;
- agreed amount; or
- in accordance with an agreed formula other than a formula that involves a combination of any of two or more of the above methods.
Lease provisions are invalid if either rent adjustment is permitted by reference to more than 1 of the above methods, or if they reserve a discretion to apply more than 1 of the above methods. If the lease provision relating to adjustments contravenes the Code, then rent must be determined in accordance with the market rent review procedure prescribed by section 21 of the Code. A lease provision which prohibits a decrease in rent (ie. a ratchet clause) is invalid.
VIC
See section 35. Only 1 of a fixed number of methods of review may be used at any one time.
Any rent review provision unless it is one of the methods fixed under the Act is void to the extent that it purports to preclude, or prevents or enables a person to prevent, the reduction of the rent or to limit the extent to which the rent may be reduced.
WA
See section 11. There is no prescription concerning the frequency of dates for review and this remains a matter of agreement. However, a rent review provision in a retail shop lease is void unless the lease specifies, for each review date, a single basis for reviewing the rent. If the review provisions are void the Act does not provide replacement provisions.
Definitions and currency