Australia’s retail leasing framework may be heading towards its most significant structural reform in decades. A new Australian Government, consultation is examining whether the eight state and territory retail tenancy regimes should be more closely aligned and what national consistency could mean for landlords, tenants, developers and retailers.
Retail leasing law in Australia is currently governed by separate legislation in each state and territory. Although the regimes pursue broadly similar objectives, they do not operate in the same way. The result is a regulatory landscape in which the same landlord, retailer or franchise group may need different lease precedents, disclosure documents and internal procedures depending on where the premises are located.
The Australian Government is now consulting on whether those differences should be reduced. The Treasury consultation, part of the revitalised National Competition Policy, asks whether greater harmonisation could lower compliance costs, make it easier for businesses to expand across borders and create a more predictable leasing environment.
However, harmonisation is not simply a question of making every law the same. The more difficult issue is deciding which differences create genuine cost and uncertainty, which protections should become the national standard, and which local rules should remain.
Why is harmonisation being considered?
Australia has eight separate retail tenancy regimes. Over time, those regimes have developed different approaches to fundamental issues including what qualifies as a retail lease, when disclosure must be given, how rent may be reviewed, what outgoings may be recovered, how assignments are handled and how disputes are resolved.
The issue is not new. The Productivity Commission identified the cost of inconsistent retail tenancy laws almost two decades ago and recommended movement towards greater national consistency in 2008. Treasury’s present consultation revisits that issue, through the lens of modern national retailing, franchising and property investment.
For a local landlord or tenant with one premises, differences between jurisdictions may have little practical effect. For national retailers, shopping centre owners, developers, franchise networks and property managers, however, those differences can require separate legal advice, documentation, systems and training in each jurisdiction, which increase compliance and legal costs associated with expanding into different jurisdictions. In an uncertain market environment, this only increases the barrier for entry.
Where do the current regimes differ?
Treasury’s consultation paper identifies a wide range of differences. Some are technical, while others can materially alter the commercial position of a landlord or tenant.
- Coverage and definitions. The tests used to determine whether retail leasing legislation applies are not uniform. Jurisdictions use different retail-use concepts, floor-area limits, occupancy-cost thresholds and shopping-centre tests.
- Disclosure. The timing, content and consequences of landlord disclosure differ, as do the obligations imposed on tenants. A process that complies in one state may not comply in another.
- Minimum lease terms. New South Wales and Queensland no longer impose a statutory five-year minimum term, while several other jurisdictions retain minimum-term protections or waiver mechanisms.
- Rent review. There are different rules governing market reviews, review formulas, ratchet clauses and the ability to combine methods of review. Those differences can have a direct effect on the economics of a lease.
- Outgoings. Although disclosure and reconciliation obligations are common, jurisdictions differ on recoverability, audit requirements, capital expenditure, promotional levies and the level of information that must be provided.
- Assignments and business sales. Consent periods, grounds for withholding consent, disclosure requirements and the release of outgoing tenants and guarantors vary materially. These differences can affect how quickly a business sale can complete and the ongoing liability of the seller.
- Shopping centres and dispute resolution. Marketing funds, trading hours, relocation and demolition protections, casual mall licensing and dispute pathways are also regulated differently.
These differences, although appear slight among the depths of the legislations, alter the process undertake by both lawyers and clients in expanding into other jurisdictions.
A single national law – or a common minimum baseline?
Treasury is considering more than one path to harmonisation. One of the proposed paths offers a single national regime that would replace the existing state and territory frameworks. That option would offer the greatest formal consistency, but it would also involve significant logistical issues with existing tenancies.
A more incremental option is a model law or national minimum baseline. Under that approach, jurisdictions could retain their own legislation while agreeing on common rules in selected priority areas for example, definitions, pre-lease disclosure, outgoings reporting or dispute resolution.
A narrow minimum standard may be easier to implement, but if too much remains outside the common framework, national businesses may still need multiple sets of documents and procedures. A single national law may deliver greater consistency, but it also requires agreement on whose policy settings should prevail. As this is only a consultation paper, there are various hurdles that the government will need to review and overcome should the proposed reforms intend to proceed.
Harmonisation does not necessarily mean deregulation
National consistency is sometimes spoken about as if it necessarily means fewer rules. That is not the only possible outcome.
If a national framework adopts protections presently found only in more prescriptive jurisdictions, landlords and tenants in other states could face new obligations. Equally, if the national position follows a less prescriptive regime, existing statutory protections could be reduced.
Minimum lease terms provide a clear example. New South Wales and Queensland have moved away from a statutory five-year minimum term, whereas other jurisdictions retain forms of minimum-term protection. Harmonisation would therefore require a policy choice being to reintroduce that protection nationally, remove it elsewhere, or develop a new compromise.
The same issue arises in relation to rent reviews, assignment liability, disclosure remedies, outgoings and shopping-centre protections. The success of reform will therefore depend less on achieving uniformity for its own sake and more on whether the chosen national rules strike an appropriate commercial balance.
The transition may be as important as the final rules
Even if harmonisation reduces compliance costs over the long term, implementation will carry an immediate cost. Landlords, retailers, developers and property managers may need to review and update lease precedents, agreements for lease, disclosure statements, assignment procedures, property management systems, policies and staff training.
A particularly important issue will be how existing leases are treated. Applying new statutory rights to agreements negotiated under the current law may alter commercial positions already agreed between parties. On the other hand, extensive grandfathering could result in old and new regimes operating side-by-side for years.
Treasury is therefore seeking views on whether changes should apply only to new leases, whether they should also apply on renewal or variation, and whether reform should be introduced all at once or progressively.
What should landlords and tenants be considering now?
There is no immediate change to the law. The consultation paper is not draft legislation and does not represent a settled Government position. However, businesses with substantial retail leasing portfolios should use the consultation period to identify where the current fragmentation creates real commercial friction.
- Do you maintain separate lease precedents or disclosure documents for different jurisdictions?
- Are transactions delayed because assignment, disclosure or consent procedures differ from state to state?
- Do property management or outgoings systems need to be configured differently depending on jurisdiction?
- Are there existing protections or commercial flexibilities in a particular state that would be important to preserve?
- Would a common national process materially reduce legal, administrative or training costs?
These questions are likely to be important not only for parties considering a submission to Treasury, but also for businesses preparing for possible future reform.
Where to from here?
Treasury is accepting submissions on the harmonisation of retail tenancies and related commercial leasing until 12 October 2026.
The consultation presents a genuine opportunity to simplify Australia’s retail leasing environment. However, consistency should not be confused with simplicity. The key challenge will be identifying which differences are genuinely inefficient and then selecting national rules that preserve an appropriate balance between tenant protection and commercial flexibility.
For landlords, tenants, developers, retailers and property managers operating across jurisdictions, the consultation is an opportunity to consider not only what could be gained from harmonisation, but also what existing rights, protections or commercial practices could be lost.
How Madison Marcus can help
Madison Marcus’ Real Estate & Development team advises landlords, tenants, developers, retailers and property managers on retail and commercial leasing across Australia. We can assist with lease preparation, disclosure, negotiation, assignments and lodgements.
