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  • Transfer Including Easement
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  • Transfer of a Timeshare
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  • Transfer of Easement in Gross

Transfer of Lease

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  • Transfer Severing Joint Tenancy
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  • e-Conveyancing FAQs
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This page aims to help you complete an electronic Transfer of Lease dealing form. This form is used for the transfer of a registered lease by the lessee. NOTE: This form is to be used to transfer a registered lease instead of a Transfer of Interest dealing form. A Transfer of Interest can only be used to transfer a mortgage or charge. A transfer of lease affecting an expired lease will only be registered where:

  • the expired lease is still recorded on the Register;
  • the lease expired less than 12 months ago or
  • the lease contains a current first option to renew or
  • is within 12 months of expiry period or within a current first option to renew term, and is accompanied by a Variation of Lease extending the term.  NOTE : In this scenario, the dealings must be lodged as a  Dealing with Exception .

NOTE: A transfer of a Crown land tenure Term lease or a Crown land Real Property Act lease must be lodged as a  Dealing with Exception . NOTE: A transfer of lease affecting a lease carried forward as a subsisting interest, i.e. 'Bk ... No. ... Lease To ...' must be lodged in as a  Dealing with Exception . NOTE: Where a writ is recorded against the lease, this dealing form must be lodged in as a  Dealing with Exception , unless the Court consents to the dealing or the writ is removed. NOTE : Both the transferor (lessee) and transferee (new lessee) must be represented in the workspace for this dealing form.

Subscriber requirements

Before lodging this document electronically via an Electronic Lodgment Network, a Subscriber must:

  • verify their Client’s identity
  • establish their Client’s right to deal with the land
  • have a properly completed and executed Client Authorisation form and
  • retain evidence that supports the dealing ( see Supporting Evidence below ).

The Subscriber must also certify that they have taken reasonable steps to ensure that the instrument is correct and compliant with relevant law and any Prescribed Requirement. For more information on these requirements see: Residual Documents

Guide to complete

Stamp Duty – required. Notice of Sale – not required. Standard Form of Caveat – a caveat noted on the Register will prevent the recording of a Transfer of Lease where the caveat is drawn against the lease. Priority Notice Noted on the Register - see Priority Notice page for more information. The following headings refer to the data fields which must be completed in order to lodge an electronic Transfer of Lease dealing form. Land Title Enter the land title reference(s). Participant Details Party Details – Party Name Select the transferor being the lessee of the subject lease. Enter the transferor being the incoming lessee. Document Create Document – Select Other Documents. Select Transfer of Lease. Dealing on Title Select lease. Lease Dealing Number Select the dealing number of the lease being transferred. Transferor Select the transferor being the lessee of the subject lease. Transferee Select the transferee being the incoming lessee. Tenancy/Shares of the Transferee Enter the tenancy/shares of the transferee. Consideration (optional) Enter the consideration. Attachment Attachment Type – Conditions and Provisions (optional) Attach any conditions and provisions if required. Attachment Type – Caveator’s Consent Attach a caveator’s consent if required. Attachment Type – Approved Forms Where the transferor or transferee is the owners corporation of a strata scheme, the following certificates are required:

  • strata schemes Approved Form 13 and
  • strata schemes Approved Form 10 where the initial period is not shown as expired on the common property title.

Execution of the certificates must take the form as set out in strata schemes  Approved Form 23 .   Where the transferor or transferee is the association of a community, precinct or neighbourhood scheme, a certificate in the form of Approved Form 21 is required. Execution of the certificate must take the form as set out in community title schemes Approved Form 18 .   Attachment Type – Mortgagee’s Consent Attach a mortgagee’s consent if required.

Supporting evidence

In addition to evidence supporting the steps taken by the Subscriber to verify the identity of their Client and establish their Client’s right to deal, the Subscriber may be required to retain other evidence to support the dealing. It is a matter for the Subscriber to be satisfied that they have met the requirements for the dealing. Please refer to the ARNECC Guidance Note 5 for assistance on retaining evidence to support conveyancing transactions in accordance with the NSW Participation Rules. All NSW legislation can be accessed at www.legislation.nsw.gov.au

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transfer of lease form nsw

Transfer and sub-letting

As a tenant you have rights under the Residential Tenancies Act 2010 and Residential Tenancies Regulation 2019 . This factsheet summarises the law in NSW about transferring a tenancy or sub-letting the premises.

Transfer or sub-letting with landlord’s consent

With the landlord’s written consent, you can:

  • transfer  your tenancy under a tenancy agreement to another person, or
  • sub-let  the premises (or part) to another person.

The landlord must not unreasonably withhold consent when:

  • you ask to transfer and one of the original tenants under the current tenancy agreement will remain as a tenant, or
  • you ask to sub-let and you will still occupy the premises.

The landlord must not charge for giving consent other than for the reasonable costs of giving consent.

Landlord may withhold consent

The landlord may reasonably withhold consent if:

  • the number of proposed occupants is more than allowed by the tenancy agreement or planning laws
  • the proposed tenant or sub-tenant is listed on a tenant database (see  Factsheet 19:  Tenant databases )
  • the landlord reasonably thinks that the premises will become overcrowded.

If the proposed transfer or sub-letting is for the whole tenancy or the whole premises, the landlord can withhold consent – whether or not it is reasonable.

Asking consent to transfer/sub-let

Write to the landlord asking for their consent to transfer or sub-let. Provide them with a draft transfer or sub-letting document that specifies by name the proposed tenant or sub-tenant. (See the sample documents below.)

Enclose evidence that the proposed tenant/sub-tenant:

  • can pay the rent (e.g. a copy of a payslip or statement from Centrelink)
  • is of good character (e.g. a reference from a former landlord or a personal reference).

Ask the landlord to sign and return the consent document to you.

If landlord withholds consent

You can apply to the NSW Civil and Administrative Tribunal (NCAT) for an order that allows the transfer or sub-let. The Tribunal will decide if the landlord’s withholding consent is reasonable.

You must apply to the Tribunal within 3 months of becoming aware that the landlord has withheld consent – do not delay.

See  Factsheet 11:  NSW Civil and Administrative Tribunal .

Rights and obligations

Upon transferring your tenancy to another person and vacating the premises, your legal liability for the tenancy ends.

Sub-letting

A tenant who rents part of the premises to another person under a separate written tenancy agreement is a  head-tenant . They have the rights and obligations of a landlord in relation to the other person.

For information about your rights and obligations as a head-tenant, contact NSW Fair Trading (see fairtrading.nsw.gov.au  or phone 133 220) or Legal Aid NSW / LawAccess NSW (see  legalaid.nsw.gov.au  or phone 1300 888 529).

The person who rents part of the premises from a head-tenant under a written tenancy agreement is a sub-tenant. They have the rights and obligations of a tenant in relation to the head-tenant, who is their landlord.

Written tenancy agreements – sub-letting

Having a written tenancy agreement is in the interest of both the head-tenant and sub-tenant:

  • the rules are clear – residential tenancies law applies
  • the Tribunal is available to resolve disputes.

Download our sample Share Housing Agreement .

See  Factsheet 03:  Bond .

You can change the names of the tenants registered for the bond by using a ‘ Change of Shared Tenancy Arrangement ’ form (from NSW Fair Trading).

Download our sample  Transfer of Tenancy document

Have the forms signed by the outgoing tenants, the incoming tenants and the landlord/agent. Return the bond form to Fair Trading and give all parties a copy of the transfer document.

If it is agreed that the sub-tenant will pay a bond, the head-tenant must:

  • give the sub-tenant a receipt on payment
  • deposit the money with NSW Fair Trading within 10 working days (unless the bond is paid in instalments – contact Fair Trading for more information about this).

The most bond that a sub-tenant can be required to pay is an amount equal to 4 weeks of their rent.

  • Sample share housing agreement
  • Podcast episodes:  Full house , and  Tenants facing additional barriers part 1
  • Easy Read fact sheet:  When you live in a share house
  • Factsheet 15: Share housing
  • Factsheet 14:  Boarders and lodgers
  • Factsheet 27:  Boarding Houses Act
  • Factsheet 09: You want to leave
  • Factsheet 16: Ending fixed-term tenancy early
  • Share Houses resources
  • Boarding houses resources
  • International students resources  
  • The Share Housing Survival Guide  (Redfern Legal Centre)

Factsheet update July 2023

This factsheet is intended as a guide to the law and should not be used as a substitute for legal advice. It applies to people who live in, or are affected by, the law as it applies in New South Wales, Australia. © Tenants’ Union of NSW.

RELATED RESOURCES

Sample letters.

  • Request for consent to transfer co-tenancy
  • Transfer of co-tenancy - consent withheld
  • Transfer of tenancy document
  • Factsheet 11: NSW Civil and Administrative Tribunal

Other resources

  • Bond Kit: How to Secure Your Bond
  • Complaints to Fair Trading
  • Death of a tenant
  • Domestic Violence – Ending your tenancy under the Residential Tenancies Act DV provisions
  • Easy Read factsheets
  • Emergency accommodation info
  • Financial assistance for renters
  • International students resources
  • New Renters Kit
  • Public housing – Rental Bonds
  • Rent Converter
  • Renting with pets in NSW
  • Request advice before a Tribunal hearing
  • Share housing agreement
  • Share Housing Survival Guide
  • Tips: Negotiating with the landlord
  • Tips: Renting after a disaster
  • Tips: Take photos when moving in or out
  • Tips: The easy way to claim your bond
  • Useful links – housing organisations, legal services, government
  • Share houses
  • Starting a tenancy
  • You want to leave

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CPN 027: Leases and change in beneficial ownership

Chapter 2 of the Duties Act 1997 (“ Act ” ) charges duty on transfers of dutiable property and other transactions which include a surrender of an interest in land and a lease in respect of which a premium is paid or agreed to be paid. From 19 May 2022 the Act also imposes duty on transactions that result in a change in beneficial ownership of dutiable property other than excluded transactions.

Under Clause 145 of Part 53 of Schedule 1 to the Act , Section 8(1)(b)(ix) of  the Act does not apply to a transaction that occurs on or after 19 May 2022 if the transaction occurs in accordance with an agreement or arrangement entered into before 19 May 2022.

This practice note outlines the circumstances when the grant of a lease will be dutiable and must be read in conjunction with CPN 025 - Change in Beneficial Ownership.

Section 8 of the Act operates to charge duty on certain specified transactions dealing with dutiable property. Section 8(1)(b)(ix) of the Act provides that duty will also apply to another transaction that results in a “ change in beneficial ownership ” of dutiable property unless it is an “excluded transaction”. Excluded transactions include “the grant, renewal or variation of a lease for no consideration” (paragraph (e)). Excluded transactions also include any transactions of a kind prescribed by the regulations (paragraph (k)) and a combination of transactions referred to in paragraphs (a) – (k). The Duties Regulation 2022 includes the following additional excluded transactions relevant to leases:

  • the creation, variation, or surrender for no consideration, of a tenant’s interest in fixtures that are fit-out for commercial premises (paragraph (f))
  • a change in tenancy under a lease for no consideration (paragraph (g))
  • the expiry, extinguishment or merger of one of more leases for no consideration (paragraph (j)).

Commissioner's Practice Note

Section 8(3) of  the Act defines the change in beneficial ownership to include the creation and the extinguishment of dutiable property. This will include the grant of a lease of land in NSW unless there is an exclusion or an exemption. Leases granted without a premium or other (monetary or non-monetary) consideration generally will not attract duty.

Note: Lease is defined in section 8(3) of  the Act as a lease of land in NSW or an agreement for a lease of land in NSW.

What is consideration for the grant of a lease?

Consideration for the grant of a lease includes monetary consideration and/or the value of the non-monetary consideration. Monetary consideration includes any amount paid or payable by the lessee for the grant of the lease. This does not include amounts paid or payable for the right to use the land being rent or rent reserved. Outgoings such as rates, charges, taxes etc are not treated as consideration or premium for the grant of a lease.

Note: If the lease is granted for monetary consideration, the Chief Commissioner will generally not require a valuation. Duty will be calculated on the consideration paid or to be paid.

In Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) (1948) 77 CLR 143 , Dixon,J stated that the word “consideration” should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts. Consideration is the money or value passing which moves the conveyance or transfer.

In Frazier v Commissioner of Stamp Duties (NSW) 85 ATC 4735, the Court considered that the question of whether a sum is premium or rent is to be determined by deciding firstly whether it is a payment required as a consideration for the granting of the lease or whether it is a payment for the use and enjoyment by the lessee of the land. Where a lump sum payment, even if described as rent in advance, is not proportionally refundable by reference to the unexpired term of a lease on an early termination of the lease, it is generally treated as a premium and not as rent.

Improvements constructed by the lessee can take the character of prepaid rent where they are credited against an obligation to pay rent or are accepted by the landlord in satisfaction of an obligation to pay rent, and there is a right of proportionate refund (payment) in the event of an early termination of the lease (other than through the default of the lessee.)  [2]

Note : If the lease is granted for monetary consideration, the Chief Commissioner will generally not require a valuation. Duty will be calculated on the consideration paid or to be paid.

Example 1: ABC Pty Ltd as lessee enters into a 6-year lease of commercial premises in a regional city at a rent of $500 per week. At the commencement of the lease there is a non-refundable upfront payment made by ABC Pty Ltd of $160,000 for the grant of the lease.  Duty will be payable on the premium of $160,000 under section 8(1)(b)(viii) of the Act. No duty is payable under section 8(1)(b)(ix) of the Act and no duty is payable on the rent.

Example 2: ABC Pty Ltd as lessee enters into a 6-year lease of commercial premises in a regional city at a rent of $500 per week. At the commencement of the lease ABC Pty Ltd makes an upfront payment of $160,000. This amount is characterised as a combination of a prepayment of rent, the unused portion of which is refundable upon termination of the lease (other than through the default of the lessee, and there are no “break fees” or penalty arrangements) and a “guarantee payment” of $4,000.  In this case, the $156,000 ($500 x 52 x 6) attributable to the prepayment of rent will not attract duty and only the amount of the $4,000 guarantee payment will attract duty under section 8(1)(b)(viii) of the Act as premium. No duty is payable under section 8(1)(b)(ix) of the Act.

A grant, renewal or variation of lease for no consideration is generally not dutiable [3] . Rent is not consideration for the grant of a right to lease the property, but rather a payment for the use and enjoyment of the property by the lessee. It follows that leases where only rent is paid or payable will not be liable to duty. Examples include retail, commercial and residential leases entered into on ordinary commercial terms. Leases or agreements to lease where consideration other than rent is paid or payable for the grant of the lease or the agreement will be liable to duty calculated on that consideration.

A lease or an agreement for lease in respect of which a premium is paid or agreed to be paid is liable under section 8(1)(b)(viii) of  the Act and will not be dutiable again under section 8(1)(b)(ix) on the premium. However, it could be liable under section 8(1)(b)(ix) of the Act on any other consideration other than premium [4] .

However, under section 8(2A) of the Act , an excluded transaction that results in a change in beneficial ownership of dutiable property is a dutiable transaction if it is part of a scheme or arrangement that, in the Chief Commissioner's opinion, was made with a collateral purpose of reducing the duty otherwise chargeable.

Example 3: A lease between a landlord and ABC Pty Ltd has 4 years left to run. XYZ Pty Ltd agrees to purchase the business and assets of ABC Pty Ltd. Rather than agree to a transfer of the lease, XYZ Pty Ltd enters into an agreement with the landlord for a new lease and ABC Pty Ltd and the landlord enter into an arrangement such that the existing lease term is varied to expire in a day.

Depending on the circumstances, including the values of the leases involved, the Chief Commissioner may be of the opinion under section 8(2A) of the Act, that the grant of the lease to XYZ Pty Ltd and/or the variation of the lease to ABC Pty Ltd was made with a collateral purpose of reducing the duty otherwise chargeable on the transfer of the original lease such that the grant of the new lease to XYZ Pty Ltd and/or the variation of the original lease is a dutiable transaction. Penalties may also apply under Part 10A of the Taxation Administration Act 1996 .

Other transactions that may be liable to duty

Certain transactions not already covered above or liable under section 8(1)(b)(iii) or (viii) could be liable to duty under other sections of the Act . If they are liable under another section of the Act , they will not be liable again to duty as a change in beneficial ownership. The following are some transactions that could trigger duty either under section 8(1)(b)(ix) or any other section in the Act .

  • early termination of a lease by the lessor for various reasons including to grant a new lease to another lessee, or to sell the premises, involving consideration for the arrangements,
  • grant of a lease where the lessee pays or agrees to pay the lessor’s legal fees which are non-refundable and is greater than $1,000. Payment of legal fees by way of or instead of rent will not be dutiable on an extension or renewal of the lease [5]
  • an option to lease land in NSW for premium [6]
  • an assignment of a lease [7]
  • a novation of an agreement for lease  [8]
  • attornment of leases on sale [9] .

Transactions that may be not liable to duty

Transactions that are not liable to duty and/or are exempt under other sections in  the Act will also not attract a liability as a change in beneficial ownership. Examples include:

  • the termination of a lease by the lessor before the expiry date where the lessee is facing hardship and there is no value passing to the lessor,
  • early termination by the lessee for various commercial reasons and a payment is made to the lessor in compensation for the rent lost by the lessor,
  • an option to a right to occupy/lease premises in a retirement village within the meaning of section 5 of the Retirement Villages Act 1999 [10] ,
  • a lease or agreement for a lease of residential premises used, or intended to be used, exclusively as a residence  [11]
  • a lease or agreement for a lease of a movable dwelling site used, or intended to be used, as the principal place of residence of the lessee [12] ,
  • an extension or renewal of a lease where the lessee pays legal fees as or instead of rent,
  • an option to extend or renew a lease.

A lease granted for non-monetary consideration

A liability to duty will arise if a lease is granted or an agreement for a lease is made for non-monetary consideration. For example, where the lessee is under an obligation to undertake improvements to the land and, under the terms of the agreement for lease or leases, the improvements are to become the property of the lessor at the end of the lease. The value of the improvements passing to the lessor could be significant depending on the improvements at the time the property and the improvements pass on to the lessor. Revenue NSW will monitor these transactions more closely.

If a lease is granted for non-monetary consideration comprising improvements to the property,  the full cost of the construction (including builder margins) undertaken or to be undertaken by the developer is taken to be the value of the improvements. This value is determined on entry into the agreement for lease or a lease.

Note: The lease or the agreement for lease will generally not require a reassessment if the cost increases or decreases after the lease or agreement for lease is assessed for duty.

Value of non-monetary consideration

The cost of the improvements and additions to the leased premises made or to be made by or on behalf of, or at the expense of, the lessee under an arrangement or covenant by the lessee (other than fit-out costs) will be the percentage attributed to the value that will be for the benefit of the lessor when the leased premises reverts back to the lessor. As a general matter, the longer the term of the lease, the lower the value of the improvements passing to the lessor. This is because the improvements will depreciate over time as will the value of the improvements that the lessor receives at the end of the lease.

Evidence of the value of the improvements must be provided by the lessee/developer at the time of stamping of the lease or agreement for lease. If a valuation is not provided or if the value does not seem reasonable or appropriate, the Chief Commissioner may assess duty on the basis of a valuation or other evidence.

However, in lieu of evidence of value, the Chief Commissioner is prepared to accept evidence of the cost of improvements and to use the following methodology to calculate the proportion of the value attributable to the improvements as the dutiable value for the dutiable transaction that is the grant of the lease. The dutiable value of the improvements will be the cost of the construction activities including GST.

Note: For these purposes, improvements include the cost of public works constructed on the leased premises and surrounding areas, on the basis that these improvements enhance the amenity and income producing potential of the buildings constructed by the lessee.

Note: The term of the lease does not include option periods.

Example 4 : The Landholder grants XYZ Pty Ltd a lease for 99 years. The lease is conditional on XYZ Pty Ltd constructing an office building, public works on the leased area and surrounding areas. Ordinarily all of the value would accrue to the builder/ lessee, and unlikely to be any value of the building passing to the lessor. As the lease is more than 50 years, the Chief Commissioner will accept the dutiable value to be nil and no duty will be payable and no evidence of value or cost will be required to be produced .

Example 5 : The Landlord grants XYZ Pty Ltd a 15-year lease of an industrial building. The lease is granted for a peppercorn rent. The lease is conditional on the lessee making improvements to the currently dilapidated industrial estate. The improvements cost $20 million. However, as per the above table, the dutiable value will be 75% of the cost of the improvements, and duty will be calculated on $15 million.

Example 5A : The Landlord grants XYZ Pty Ltd a 15-year lease of an industrial building. The consideration for the use of the premises under the lease is a prepaid rent of $15 million. There is no separate consideration for the grant of the lease. The lessee can satisfy the obligation to pay rent by either the payment of cash, or by the construction of improvements with an agreed value of $20 million. In either case, if there is an early termination of the lease (other than through the default of the lessee), the lessee is entitled to a proportionate refund. No duty is payable even if the lessee constructs the improvements, as it takes the character of prepaid rent.

Example 6 :   The Landlord grants XYZ Pty Ltd a 15-year lease of an industrial building. The lease is granted for a peppercorn rent. The lease is conditional on the lessee making improvements to the currently dilapidated industrial estate. The improvements cost $20 million. A valuation is prepared showing that the evidence of value of the improvements after 15 years is $12 million.  The lessee submits a valuation on this basis and after analysis of the valuation, this is accepted by Chief Commissioner and duty will be calculated on $12 million.  

Example 7: Goodhealth Pty Ltd was awarded the contract by the NSW Health under a Public Private Partnership project to build a hospital in Southwestern Sydney. The lease for 60 years is conditional on Goodhealth Pty Ltd planning, developing and constructing a hospital. Goodhealth Pty Ltd will lease the hospital for less than market/arm’s length fee. The cost of the construction will be the consideration for the grant of the lease. However, as the lease is for 60 years, the Chief Commissioner will accept the dutiable value to be nil and no duty will be payable and no evidence of value or cost will be required to be produced .

Example 8: Prodev Pty Ltd, a development company, has an agreement with the owner of the land to develop the land. Prodev Pty Ltd pays $5 million for the grant of a 4-year construction licence to enter the land and the adjoining land to undertake the approved works. The development includes site works, public works and building works consisting of new residential development. The development costs are estimated to cost $95 million. When the building is completed, Prodev Pty Ltd is granted a 99-year lease over the development.

The 4-year construction licence with an upfront payment of $5 million for the grant of the licence is not liable as it is not a premium for the grant of a lease. The 99-year lease is granted with building works (non-monetary consideration) of $95m will not be liable to duty under section 8(1)(b)(ix) of the Act.

However, if the lease is for 20 years, then the duty payable will be on 75% of $95 million i.e., duty on $71.25 million.

Example 9: Prodev Pty Ltd is a development company which has an agreement with the owner of the land to develop the land. Prodev Pty Ltd pays $5 million upfront as premium for the grant of a 4-year lease to enter the land and the adjoining land to undertake the approved works. The development includes site works, public works and building works consisting of a new residential development. The development costs are estimated to cost $95 million. When the building is completed, Prodev Pty Ltd is granted a 99-year lease over the development.

The upfront payment of $5 million for the grant of the lease is a premium and is liable to duty as a premium under section 8(1)(b)(viii) of the Act. The 99-year lease granted with building works (non-monetary consideration) of $95m will not be liable to duty under section 8(1)(b)(ix) of the Act.

However, if the lease is for 20 years, then the duty payable will be on 75% of $95 million i.e. duty on $71.25 million.

Duty under sections 8(1)(b)(viii) & 8(1)(b)(ix) of the Act could be aggregated under section 25 of the Act.

  • ^ The terms “beneficial ownership” and “change in beneficial ownership” and “excluded transactions” are defined in section 8(3) of the Act .
  • ^ See example 5A.
  • ^ Section 8(2A) applies to arrangements that, in the Chief Commissioner’s opinion, are made with a collateral purpose of reducing the duty otherwise payable.
  • ^ See example 9 in the CPN.
  • ^ See transactions that may not be liable to duty.
  • ^ An amount paid or payable for the grant of an option to lease is taken to be a premium under section 8(3). Duty is payable when the option is exercised.
  • ^ Liable under section 9B of  the Act or as a transfer of lease. Transfer includes an assignment.
  • ^ Liable under section 9C of the Act .
  • ^ Duty will only be payable in cases where the lessee seeks compensation from the lessor as a result of an early termination.
  • ^ A lease of premises in a retirement village is exempt under section 65(16)(d) of the Act .
  • ^ Section 53A(a) of the Act .
  • ^ Section 53A(b) of the Act .
  • Previous CPN 024: Interest and penalty tax guidelines
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The Office of the Registrar General is managing the concession to ensure integrity, security, performance and availability of the NSW land titles system through a range of oversights, rules and directions, quality assurance and strong engagement with stakeholders.

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transfer of lease form nsw

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NOTE: Below are tables that show dealings mandated to be lodged electronically under Version 5 of the Conveyancing Rules. The below information is historical information only.

Conveyancing Rule 8.8 in Version 6 of the Conveyancing Rules requires all land dealings, caveats and priority notices to be lodged electronically using an Electronic Lodgment Network on and from 11 October 2021, irrespective of the date they were signed. Please refer to Conveyancing Rules Version 6 , the Lodgment Rules and Lodgment Rules exceptions list .

Mandates under Conveyancing Rules Version 5

From 1 July 2019, mainstream dealings, whether standalone or in combination, which are eligible to be lodged electronically must be lodged electronically using an ELN, except where they are accompanied by any other dealing (see Conveyancing Rule 8).

These dealings are currently available to be lodged electronically.

A S Laumberg, Solicitor

Transferring a Lease to a New Business Owner

As part of the sale of a business the vendor and the purchaser have to decide if the purchaser wishes to have a transfer over the existing lease of the business premises or wishes to apply to the lessor for a new lease. If it is to be the transfer of an existing Lease then for commercial premises the lease itself will set out the requirements to be satisfied but in the case of retail shop premises it is the Retail Leases Act 1994 NSW which regulates the arrangements betweens the parties. Normally, for both types of leases, an application will have to be made to the lessor to approve the transfer of Lease and the lessor will have to be provided with satisfactory evidence as to the purchaser’s financial standing and business experience. Provided the lessor does give its consent in principle to the transfer then the lessor’s solicitors will prepare a Deed of Assignment of Lease between the lessor, the outgoing lessee and the incoming lessee formally consenting and assigning the rights and obligations under the lease to the incoming lessee. The Deed will also deal with other matters including payment of any moneys owing under the lease and whether or not the outgoing lessee is to be released from future liability under the lease. The Deed of Assignment of Lease normally becomes effective on the date of settlement of the sale of the business. In the case of retail premises the Retail Leases Act sets out a number of additional steps or matters including:

1. The lessee must request the lessor’s consent to the transfer in writing. However, before making such request the lessee must furnish the proposed lessee with a copy of any Lessor’s Disclosure   Statement in respect of the lease given to the lessee together with details of any changes that occurred since; 2. The lessor is then entitled to request information it may reasonably require concerning the financial standing and business experience of the proposed incoming lessee. According to the recent NSW Court of Appeal decision of Lockrey v Historical Houses Trust of NSW the lessor can only request specific documents such as financial statements and tax returns for a specific period; 3. If the outgoing lessee (or any guarantor) wishes to be protected from ongoing liability under the lease it must give a copy of a Assignor’s Disclosure Statement to the incoming lessee and the lessor at least 7 clear days before the assignment becomes effective i.e. usually from the date of settlement of the sale of the business; 4. If the lessor does not deal with the request for consent to the transfer expeditiously there will be deemed consent if the lessor has not responded within 28 days after the request was made; and 5. The lessor is only entitled to refuse consent to the transfer of lease in certain circumstances which are normally: (a) if the incoming lessee proposes to change the use of the shop; (b) if the incoming lessee has financial resources or retailing skills inferior to those of the outgoing lessee; or (c) if the outgoing lessee has not complied with the procedure to obtain consent to the transfer.

I’m Selling a Business. How Do I Transfer the Lease?

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By Joshua Elloy Senior Legal Project Manager and Lawyer

Updated on August 3, 2017 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

Assignment of the Lease to the Purchaser

Assigning the lease, surrendering the lease, key takeaways.

When  selling a business  with a lease, it’s important to ensure the purchaser has control over the premises after settlement. This can be achieved in two ways:

  • have the seller assign the lease to the purchaser at settlement; or
  • the seller can  surrender  (i.e. give up) their lease and the purchaser can enter into a new lease with the lessor.

The decision for the seller to assign or surrender the lease can depend on:

  • the time left on the lease term;
  • whether the new purchaser wants to accept the terms of the current lease; and
  • the lessor’s willingness to enter into a new lease instead of assigning the existing lease.

The seller should address how the lease will be handled when negotiating the terms of the sale of business agreement with the purchaser.

Assigning the lease  involves the seller transferring their rights under the lease to the purchaser through a  deed of consent to and assignment of lease  ( Deed of Assignment ). The deed is a legal document that places the new tenant in the shoes of the former tenant for the remaining term of the lease. The new tenant must comply with all of the lease obligations as if they were the original tenant.

Confirmation and Consent

You will need to confirm whether your current lease contains a clause allowing you to assign the lease and whether you need the lessor’s consent. The lessor cannot prevent the assignment if the purchaser can pay the rent under the lease. If you don’t obtain the lessor’s consent, you may be in breach of the lease and sale of business agreement.

The lessor will usually request the following from the purchaser to assess their suitability as a tenant and provide consent to the assignment:

  • financial information such as bank statements;
  • business history or CV; and
  • professional references.

The lessor will then have their lawyer prepare the Deed of Assignment.

Assigning the lease involves the seller, purchaser, lessor and lawyers acting for each party. During the assignment, the seller is the existing lessee ( assignor ). The purchaser is the new lessee ( assignee ).

The assignee, assignor and the lessor will enter into the Deed of Assignment. The assignee is then placed into the same position as the assignor was under the lease. Parties usually sign three copies of the Deed of Assignment, and each party retains a copy for their records.

Depending on which state the premises is located, the assignor may also need a  transfer of lease  form to register the assignment with the land titles authority of your state. Generally, the assignor and assignee must sign the form, send it to the lessor who then sends it to the land titles office for registration.

Retail Leases

In most states and territories, the assignor must provide a disclosure statement to the assignee and the lessor if it is a retail lease. In NSW, the assignor’s disclosure statement includes any details that the assignee needs to know such as:

  • changes to the lease since it was first entered into (e.g. any security, such as loans, or rental incentives the landlord has provided to the tenant); and
  • the business’ sales figures for the period the lease has been in operation.

In NSW, the assignor will need to provide the disclosure statement to the assignee and the lessor within seven days before the assignment of the lease. This notice will release them from any liability that arises under the lease after settlement.

There are different requirements and consequences regarding the assignor’s disclosure statement in each state and territory, so it’s important to be aware of the requirements in your state.

The seller may also decide to surrender or ‘give up’ the lease via a  deed of surrender of lease.  Once parties enter into the deed, the existing lease agreement ends, and the lessor can enter into a new lease agreement with the purchaser. Typically, the date of surrender of the existing lease is the same as the commencement date of the purchaser’s new lease.

Unlike a Deed of Assignment, the lessor does not have to agree to ‘surrender’ the current lease and enter into a new lease with the purchaser. The seller should also confirm whether the lease includes a surrender clause.

If you surrender the lease as a seller, you will be required to pay any costs relating to terminating the lease, including any outstanding rent, unless you and the lessor reach an agreement. Before surrendering your lease, it is a sensible idea to talk to your lessor about what you will be responsible for when surrendering the lease.

If your lease is registered with the land titles office in your state, you may also need to sign a Surrender of Lease form with the lessor.

When selling a business, it’s important that you understand your rights and obligations for assigning or terminating the lease. As a seller, ensure that you correctly assign or terminate your lease so that your business is no longer liable for any issues that arise after you sell your business.

If you have any questions or need assistance selling your business, get in touch with  LegalVision’s specialist sale of business lawyers  on 1300 544 755.

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NSW - Land Registry Service and Revenue NSW interactive PDF forms

  • Transfer - Form 01T (LL-NSW-RPA081)
  • Transfer without monetary consideration - Form 01TWC (LL-NSW-RPA082)
  • Lease - Form 07L (LL-NSW-RPA083)
  • Request for CoRD holder consent - transacting party (LL-NSW-RPA089)
  • Request for C0RD holder consent - third party (LL-NSW-RPA090)
  • Transmission application byan executor, administrator or trustee - Form 03AE (LL-NSW-RPA084)
  • Transmission application by a devisee, beneficiary or next-of-kin - Form 03AD (LL-NSW-RPA085)
  • Notice of death - Form 02NT (LL-NSW-RPA086)
  • Variation of lease - Form 07VL (LL-NSW-RPA087)
  • Surrender of lease - Form 07DL (LL-NSW-RPA088)
  • Withdrawal of caveat - Form 08WX (LL-NSW-RPA091)
  • Purchaser declaration form – individual - Form ODA 076I (LL-NSW-OSR671)
  • Purchaser declaration form - corporation or government - Form ODA 076NI (LL-NSW-OSR676)
  • First home buyers assistance application form - on or after 1 July 2017 and lodgement guide - Form ODA 066A (LL-NSW-OSR678)
  • Application for reassessment and refund cancelled agreements for the sale or transfer of dutiable property - Form ODA 032 (LL-NSW-OSR679)
  • Application for exemption or refund - break up of a marriage or de facto relationship - Form ODA 069 (LL-NSW-OSR680)
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  • UPDATE the document via the Javascript window and; to
  • SAVE & CLOSE the interactive PDF to the LEAP matter.

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Sharing a rented home

Helpful documents and links.

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There are a number of ways to share a rented home. Each arrangement has different obligations you need to follow.

On this page

Types of shared arrangements, consent from the landlord, changing bond records.

There are a number of ways to share a rented home. Each arrangement has different requirements.

  • Sub-letting – in a sub-letting arrangement, the tenant can rent part or all of the property to another person. The tenant remains the landlord's tenant and is still responsible for the tenancy, including the actions of the sub-tenant.
  • Transferring or assigning the agreement – if a tenant transfers or assigns the agreement, they are inviting someone to be added or take over the agreement. The existing agreement, including any remaining fixed term period and the rent payable, is transferred to the new tenant or co-tenant. There is no need to sign a new agreement, although it is best to put the arrangement in writing to avoid any disputes later on.
  • Additional occupants – an additional occupancy arrangement is when a tenant informally invites someone to stay with them. This could be a family member, friend or stranger and it may be a temporary or permanent arrangement.

A tenant must obtain a landlord’s written permission to sub-let or transfer any part of the property.

If a tenant does this without consent, they are breaching the terms of the tenancy agreement.

Having an additional occupant does not require permission, although a tenant must not exceed the maximum number of permitted occupants stated on the agreement.

In a social housing arrangement, the decision is made by the social housing provider's own policies and procedures.

When can a landlord say no?

A landlord cannot unreasonably say no to requests to sub-let part of the property or to add 1 or more co-tenants to the tenancy.

Examples of when it is reasonable for a landlord to say no include, but are not limited to:

  • if the total number of occupants permitted under the agreement would be exceeded
  • if the total number of occupants would exceed any local council rules and regulations
  • if the person being proposed is listed on a tenancy database
  • if they reasonably believe it would result in the property being overcrowded.

If a tenant’s request is refused, and they believe the decision is unreasonable, they can apply to the Tribunal to hear their case.

A landlord can refuse consent to a request to sub-let the whole property or transfer the whole tenancy, whether or not the refusal is reasonable.

A tenant cannot be charged by the landlord or agent for a sub-let or co- tenancy, other than for the landlord's reasonable expenses of giving consent.

Co–tenants can pass bond money between themselves.

A Change of Shared Tenancy Form needs to be signed and lodged with us to update the bond records.

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Australia: A refresher on lease duties in New South Wales

What you need to know.

  • While leases entered into in New South Wales after 1 January 2008 are not subject to stamp duty, there are certain events relating to leases that may still attract stamp duty
  • Transactions such as the transfer or assignment of a lease, the surrender of a lease and the payment of premiums may create 'duty events'
  • Landlords and tenants should carefully consider whether stamp duty may be payable on transactions relating to their leases, and take steps to ensure any payable duty is managed appropriately.

From 1 January 2008 stamp duty on lease instruments was abolished in New South Wales. A lease entered into after this date is not subject to stamp duty, including any variation made to a lease that was entered into before 1 January 2008.

However, in some lease transactions, stamp duty is still relevant. In this article we examine some of the situations which may create a 'duty event'.

Transfer or assignment of lease

Duty Event: In a situation where a tenant transfers its interests in a lease to an assignee:

  • If money is being paid or other consideration for the transfer of lease is passing (or is deemed to be passing), duty is payable on the amount of the consideration.
  • If there is no money being paid or other consideration passing (or deemed to be passing), then no duty is payable.

Regardless of which Duty Event arises, a Land and Property Information ( LPI ) 'Transfer of Lease' form must be submitted to NSW Office of State Revenue ( OSR ) for assessment. Even if no consideration is passing, the 'Transfer of Lease' form still needs to be stamped at a nominal sum of $10 per instrument.

The LPI will not accept the 'Transfer of Lease' form for registration unless it has been stamped by the OSR.

Surrender of lease

Duty Event: In a situation where a tenant's interest in a current lease is surrendered by agreement:

  • Tenant seeking a surrender of lease

Where a tenant voluntarily surrenders its interest in whole or part of the premises, then irrespective of whether or not any surrender fee payment is to be made by the tenant to the landlord, no duty will be payable on the surrender.

  • Landlord seeks the tenant's surrender of its lease
  • Where a landlord requires a tenant to surrender its interest in the premises and agrees to pay the tenant compensation, then duty is payable by the landlord on that compensation (being the consideration passing from the landlord to the tenant). The ADT decision in Eastmark Holdings Pty Ltd v Chief Cmr of State Revenue 1 dealt with a landlord who induced the tenant to surrender its interests by paying the tenant a "vacancy fee". The Tribunal took the view that, in substance, the surrender of the lease and the vacancy fee were part of the same transaction, being payments made as consideration for the tenant vacating the premises. Accordingly, the vacancy fee was considered dutiable.

As with an LPI 'Transfer of Lease' form, an LPI 'Surrender of Lease' form must be submitted to OSR for assessment and stamping before being lodged at LPI. If no consideration is passing, or any consideration passes from the tenant to the landlord (rather than from the landlord to the tenant), then the 'Surrender of Lease' form will be stamped at a nominal sum of $10 per instrument.

Duty Event: In a situation where a tenant makes a payment to induce a landlord to grant a lease, that payment may be considered a capital payment and may be subject to duty.

For example, a new building is being constructed in a busy neighbourhood with great exposure. If a tenant pays money to the developer to secure a lease (to which the Retail Leases Act 1994 (NSW) does not apply), this payment may be considered an inducement separate from the payment of rent and the developer may be liable to pay stamp duty on it. It should be noted that the Retail Leases Act prohibits the payment of key money (which is widely defined but essentially refers to any premium or benefit conferred on or at the direction of a lessor or its agent in connection with the granting, renewal, extension or assignment of a retail shop lease).

Readers should be aware that a pre-payment for a lease is not always dutiable, and whether or not duty must be paid can be dependent on the nature of the landlord's business. This is shown in Kosciusko Thredbo Pty Ltd v Federal Commissioner of Taxation 2 which involved the sub-letting of apartment blocks in a ski resort and the consequent receipt of lease premiums. In that case, the court found that because the receipt of premiums were seen to be a repetitive and essential part of Kosciusko Thredbo's ordinary course of business, the premiums were considered ordinary income and not a character of capital payment.

It is important to note that leases of certain types of premises are exempted from duty. Under section 65(16)(d) of the Duties Act 1997 (NSW), premiums paid for leases of premises in retirement villages within the meaning of section 5 of the Retirement Villages Act 1999 (NSW) are not liable to duty.

Parties should also understand the distinction between a lease premium and a payment of rent up front or in lump sum instalments. The mere fact that a tenant pays the entire rent up front as consideration for the landlord entering into the lease, would not necessarily categorise that rent payment as a lease premium.

The general principle applies that:

  • if a tenant makes payment which is of the character of a capital payment linked to access rather than use, that payment is a premium and duty is payable on that premium; and
  • if a tenant makes payment for the use of the premises, that payment would be classed as an ordinary income of rent and no duty is payable.

This is significant because as noted above, no duty is payable on the rent in relation to leases entered into after 1 January 2008.

Can an incentive be subject to duty?

As noted above, payments by the landlord to the tenant in consideration for the tenant surrendering its lease may be subject to duty. This may present a problem where a landlord and tenant negotiate lease terms which involve the surrender of the tenant's existing lease.

The question may arise as to whether any part of any incentive paid or allowed by the landlord in relation to the new arrangement is consideration for the tenant to surrender its existing lease. If it is, the landlord may be liable to pay duty. This will be of particular concern to the tenant if the relevant documentation providing for the incentive states that any duty is to be paid by the tenant.

It may be preferable to document the surrender of any existing lease separately from the new lease arrangements. Otherwise, it may assist to ensure the lease documentation contains acknowledgements that:

  • the existing lease is surrendered at the tenant's request
  • the landlord has agreed to the surrender at the request of the tenant
  • the landlord has not sought to remove the tenant from the surrendered space
  • no payment, premium or consideration is sought by the tenant or paid by the landlord in respect of the surrender, and
  • any incentive provided under the new lease is specifically and wholly provided by the landlord in consideration for the tenant entering into the new lease.

Key takeaways

  • Where no consideration is passing for the transfer or surrender of a lease, it might be tempting to assume that nothing needs to be done. However, it is important to remember that the LPI 'Transfer of Lease' or 'Surrender of Lease' form must still be submitted to the OSR for assessment and stamping before being lodged for registration at the LPI.
  • Landlords should always be cautious in considering stamp duty implications of a surrender of lease, bearing in mind that if consideration passes from them to the tenant, stamp duty is payable.
  • Tenants must be similarly cautious regarding the landlord's stamp duty liability if the relevant documentation provides that any such duty is to be paid by the tenant.
  • In relation to lease premiums, landlords must be careful for two key reasons; firstly to ensure that they are not prohibited under any relevant legislation, and secondly to understand whether the landlord may be required to pay duty.
  • Where parties are negotiating complex agreements around proposed new lease arrangements, which involve the surrender of existing leases or surplus space, they should pay particular attention to how any incentives are dealt with and documented.

1 Eastmark Holdings Pty Ltd v Chief Cmr of State Revenue [2004] NSWADT 41 2 Kosciusko Thredbo Pty Ltd v. FC of T 84 ATC 4043; 15 ATR 165

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories

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Starting a lease

When your rental application is accepted, you will usually need to sign a lease, pay a rental bond, and complete a condition report for the property.  

If your rental application is accepted, the landlord or agent will usually ask you to:

  • sign a lease , also known as a residential tenancy agreement
  • pay a rental bond
  • pay up to 2 weeks' rent in advance
  • complete and return the condition report within 7 days of signing the lease.

The lease is a legal document that outlines all the rules and conditions of your stay at the property. 

It is important that you read and fully understand the lease and all other documentation before signing.

Related information

  • Life Events

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Retail Tenancy Guide

Small business owners and operators should read this guide, together with a copy of the proposed lease, before starting lease negotiations. The guide covers many common scenarios including starting a lease, changing the rent, transferring a lease and where lessors and lessees are in dispute. It can be used as a reference at any point during the term of the lease.

Message from the Small Business Commissioner

A retail lease is often a critical contributor to the success of a business. 

A lease secures a business’s right to trade at a premises. For the property owner, it can underpin the revenue that supports an investment decision. 

Entering a lease is a major commitment and it is critical that you understand your rights and responsibilities as a tenant (lessee) or landlord (lessor) before you enter a lease agreement and when any issues arise during the term of the lease. 

This guide will assist with many common scenarios including starting a lease, changing the rent, transferring a lease and where lessors and lessees are in dispute. It is relevant for all retail leases entered into after 1 July 2017. 

We recommend this guide be read as soon as, if not before, lease negotiations start, alongside a copy of a proposed lease. 

The guide can also be used as a reference at any point during the term of a lease. The guide does not replace professional advice or try to explain every aspect of the leasing laws. Different laws cover retail, commercial and residential leases and it is up to lessors and lessees to know their rights and responsibilities, including obligations and requirements set out within the Retail Leases Act 1994 (NSW). 

While many individuals or organisations represent themselves as experts in leasing matters, only some are qualified to give advice. We strongly advise getting independent and professional advice before signing a lease and encourage you to visit the Commission’s website smallbusiness.nsw.gov.au or call 1300 795 534 if you require further information. 

In the event of a dispute during the lease, the Commission offers a cost-effective mediation service which can help resolve lease disputes quickly and efficiently.  

We hope this guide helps both lessees and lessors to successfully negotiate positive outcomes regarding retail leases.   

Chris Lamont NSW  Small Business Commissioner

Things to know before signing the lease

Signing a lease is a significant financial commitment and the longer the lease, the longer the commitment. No matter how long the lease is, it’s important for both lessors and lessees to understand their rights and obligations before signing a lease.

What is a retail lease?

A retail lease is a legally binding contract between the lessor and lessee for the use of the premises where the lessee conducts their retail business. A retail lease cannot override the requirements of the Retail Leases Act 1994 (NSW). The lease must be provided to a potential lessee at the negotiating stage by the lessor.

The Act will relate to your premises if it is less than 1,000 square metres in size, sells and supplies goods and services, is a type of retail business listed in Schedule 1 of the Act, and the length of the lease is between six months and 25 years. Even if your type of business is not listed in Schedule 1, it may be covered by the Act if the premises you are leasing is in a shopping centre.

To find out if your business type is listed in the Act, go to: legislation.nsw.gov.au/view/whole/html/inforce/current/act-1994-046

When does a lease start?

A lease typically starts when both parties sign it. However, a lease can start even if an agreement has not been signed, if:

  • the lessee takes possession of the premises; or
  • the lessee begins to pay rent.

If the lessee accepts the keys to the premises, this may be enough to start the lease – both parties should be careful to note whether handing over the keys is meant to start the lease or not (such as for a pre-lease inspection).

Terminology

Note that the terms ‘lessor’ and ‘landlord’ (usually the property owner) are interchangeable, as are the terms ‘lessee’ and ‘tenant’. This guide will use the terms ‘lessor’ and ‘lessee’ which are further defined in the Glossary.

What should the lease include?

While there is no standard lease as such, a lease should include:

  • The lease term (start/end dates)
  • How the rent is calculated
  • Any agreed securities (eg. cash bond, third party guarantee, or bank guarantee)
  • Who is responsible for the costs of installing fixtures and fittings in the premises (the fit-out)
  • Who repairs and who maintains the premises and equipment
  • If there is an option to renew or extend the lease
  • A description of the premises and the address
  • If and how the rent can be changed
  • The type of business the lessee intends to operate (i.e. the permitted use)
  • Any outgoings the lessee must pay (e.g. land tax, cleaning, security, council rates, water/utility charges, etc)
  • Core trading hours (when the premises must be open for business) - if applicable
  • Any ‘make good’ provisions

Make sure that the lease includes the specific things relevant to the particular premises. Disputes often occur over small issues due to a lack of clarity in the lease. Importantly, no lease can override the Act which itself sets out certain base requirements.

Does the lease need to be registered?

Lessors must register a retail lease with a term of more than three years. This must be done within three months of the lease being signed by both parties via the NSW Land Registry Services. Visit their website:nswlrs.com.au/About/About/Announcements/96

More guidance on registering the lease.

What is ‘permitted use’?

Permitted use usually describes the type of business that the lessor allows to be run from the premises under the lease. Before signing the lease, the lessee should check with the local council that the premises can be used for that particular business and what permits may be required from the council (and strata manager if in a strata building) and any other authorities. Without these approvals in writing you may not be able to run your business from the premises. If a purchaser is taking over a lease (e.g. when buying a business), they should ensure the same approvals are in place. Some examples of permitted use are:

  • For a hairdresser – consider, does it also include beauty treatments?
  • For a takeaway shop – consider, can meals be served on re-usable plates? Can the type of takeaway food be changed?

Negotiating rent and trying to understand ‘market rent’

The rent payable under a lease is negotiated between the lessor and lessee. There are a variety of ways that the rent payable under the lease may be structured. For example, the lease may require base rent payments with outgoings paid on top of this, or base rent with a percentage of sales turnover (percentage rent or turnover rent). Whatever rent is agreed, this must be outlined in the lease.

‘Market rent’ is rent which is likely to be paid for a similar property based on size, location etc. Lessees may wish to consult other lessees in the same complex, lessees in neighbouring premises, independent real estate agents, relevant industry associations, specialist retail advisors, commercial valuers, conveyancers or private lease negotiators to help understand ‘market rent’ for the premises. Historical real estate listings can be reviewed online or by accessing historical leases from NSW Land Registry Services (nswlrs.com.au/Find-Records), with whom all leases greater than 3 years should be registered. There are also a range of re-sellers of thisinformation. Useful internet search terms include ‘lease data’, ‘lease information’ and ‘lease records’. Consider also any incentives being offered by the lessor and how this affects the overall cost of the lease.

  • The lessee should know what expenses they will incur in preparing the premises for trade and follow the fit-out standard required by the lease.
  • The lessee should check whether the electrical wiring in the premises is part of an embedded network (typically in apartment blocks, retirement villages, caravan parks and shopping centres) as it may affect their energy costs. For further information see: aer.gov.au/consumers/information-for-electricity-consumers-in- embedded-networks
  • The lessee must pay the rent on time. If they don’t, the lease may allow them to be locked out without warning.

Lease incentives

It is common for lessors to provide incentives to lessees to enter into retail leases. Incentives can be provided in different ways, but the most common are:

  • a rent-free period;
  • a rent reduction/abatement over a part or whole of the lease term;
  • the lessor contributes to the lessee’s fit-out;
  • the lessor pays outgoings;
  • a combination of the above.

These arrangements may be outlined in a deed or agreement which is separate to the lease. When comparing leases of various premises, be mindful that due to such confidential ‘side arrangements’, the ‘true’ or ‘effective’ rent may not be obvious.

Can the lessee afford the rent?

A business plan should help lessees know whether they can afford to rent the premises. The rent itself is only one aspect of the costs of a lease. There are many other costs that need to be considered including fit-out, outgoings, insurance and make-good requirements.

For more information see section 2 of this Guide ‘Understanding the Costs of Leasing’. Even if rent is considered reasonable compared to other premises, the focus should be on whether the overall costs of the lease align with the business plan. For help with a business plan, the services offered by Business Connect are a great starting point. Visit their website: https://www.nsw.gov.au/working-and-business/business-advice-and-support/about-business-connect or call 1300 134 359.

  • Consider getting independent legal advice about the lease, the Disclosure Statement, and the ongoing cost implications.
  • Ensure the lease and the Disclosure Statement describe the premises’ permitted use accurately, and for the life of the lease term.
  • Check council approvals (and any other necessary approvals) are in place for the business type.
  • Seek advice on outgoings for similar premises and be clear on what contribution the lessee will be making to lessor outgoings.
  • Write a report on the condition of the premises before the lease begins that both the lessor and lessee sign. This may include photos.
  • Be clear about the key contact points for any future discussion about the lease obligations during the term and maintain open

and respectful communication throughout. Miscommunication is a key contributor to disputes and can escalate into unnecessary and costly conflict.

Rent review

Most leases will provide that the rent can be reviewed on a regular basis, usually every 12 months. The lease will also stipulate the method that is to be used for a rent review. Some common methods are:

  • a set percentage increase;
  • consumer Price Index (CPI) – The lease should detail which CPI measure is to be used (eg. the CPI published by the Australian Bureau of Statistics and whether it is monthly or yearly CPI);
  • market review;
  • any other agreed formulae or method.

Relocation or demolition clauses

A lessee will want to consider any potential impact on their business if the lease includes a relocation or demolition clause. Note that any relocation to a new premises may result in an increase in rent if the new premises has higher commercial value, unless negotiated otherwise.

Shopping centre leases

A shopping centre is defined in the Act as a cluster of premises:

  • which are owned by the same person or company/s on the same strata plan;
  • where at least five premises are used for retail business;
  • which are located in the one building or in two or more buildings that are either adjoining or separated only by common areas or other areas owned by the retail shops owner; and
  • which are regarded or promoted as a centre, mall, court or arcade.

There are many special issues to consider when leasing in a shopping centre including:

  • Rent based on turnover is sometimes negotiated, turnover rent is usually a percentage of the actual turnover of the business conducted from the premises. If a lessee agrees to pay turnover rent, they do not have to report their online sales unless the sales “touch” the premises, such as pickup or delivery from the premises;
  • a contribution by the lessee to the costs of advertising and promoting the shopping centre (marketing/promotional levies) is often negotiated;
  • the centre’s core trading hours may change if a majority of premises agree to this in writing; and
  • there may be relocation or other disruption in the event of a redevelopment, unless you negotiated otherwise.

Potential lessees in a shopping centre may wish to enquire about:

  • The Reporting of Sales and Occupancy Costs Retail Industry Code of Practice (Sales Reporting Code) at scca.org.au/wp-content/uploads/2015/06/FINAL-Code-of-Practice_ Reporting-of-Sales-and-Occupancy-Costs_2018.pdf ; which encourages a mutual obligation arrangement that if a lessee provides turnover information to the lessor as part of the lease the lessee can request the lessor provide them with aggregate (anonymous) shopping centre data.
  • The Casual Mall Licencing Code of Practice at scca.org.au/industry-information/casual-mall-licensing-code/ . Part 9 of the Disclosure Statement refers to this code and other aspects of the shopping centre.
  • Consider getting independent advice on the likely costs of any fit-out (e.g. from a certified quantity surveyor), particularly in shopping centres where high construction standards may apply. Agree in writing (in the lease if possible) what fit-out items can stay and what must be removed, and how the premises will be ‘made good’ at the end of the lease.
  • the annual sales of the centre;
  • turnover for specialty shops per square metre, using at least three categories (food, non- food and services);
  • centre traffic count;
  • details of fit-out construction standards;
  • details of when the leases for major lessees end; and
  • any planned construction works at the shopping centre.

Before signing a proposed lease, the lessee may wish to:

  • Read our guidance ‘Before you sign the lease’ .
  • Read the draft lease and get independent advice on anything they are unsure about and try to negotiate any aspects of the lease they are not happy with. Contact the NSW Law Society’s solicitor referral service .
  • Clearly understand the overall costs and risks of the lease for their business, and take independent advice if unsure. A great starting point for business support is Business Connect . Also see section 2 of this Guide on ‘Understanding the Costs of Leasing’.
  • Obtain the Retail Lease Disclosure Statement (with Part A signed by the lessor) at least seven days before they begin a new lease or renew a lease. There are two parts to the Disclosure Statement – one that the lessor signs (Part A, known as the Lessor’s Disclosure Statement) and one that the lessee signs (Part B, known as the Lessee’s Disclosure Statement). A template Retail Lease Disclosure Statement is available here.
  • Carefully read the Disclosure Statement and our guidance ‘Information about Disclosure Statements’ . Consider getting legal advice to ensure they understand it. Check that it includes all the agreements reached during negotiations including whether the lessor expects to do any works that may disrupt your business. If they don’t understand or don’t agree with any parts of the Disclosure Statement the lessee should discuss this with the lessor and ensure any amendments to the lease are also noted in the Statement following any discussions.
  • Seven days after receiving the Lessor’s Disclosure Statement (Part A) the lessee must provide the lessor with the Lessee’s Disclosure Statement (Part B).

Understanding the costs of leasing

It is important to be aware of the costs and risks of leasing and incorporate these into any business planning. Seek independent advice from a retail leasing expert, accountant, solicitor or others before signing a lease.

The main costs of leasing are:

Lease preparation

The lessor must pay the full cost of preparing the lease, including any mortgagee consent fees. However, if the lessee asks for changes after the signed Lessee’s Disclosure Statement has been returned to the lessor, the lessee may be required to pay for those amendments. More guidance on preparing the lease .

Lessees will usually be responsible for the costs of installing fixtures and fittings in the premises (the fit-out). In shopping centres, there is usually a standard of construction required for fit-outs. Lessees may also be responsible for some or all of the lessor’s costs of preparing the premises for the fit-out. The Disclosure Statement must state who pays these costs. Lessees must agree to the maximum cost of the lessor’s fit-out costs in writing before beginning the lease. Depending on the cost of the fit-out it may be worthwhile to have an independent certified quantity surveyor verify the costs associated with preparing the premises for fit-out. The lessor and lessee will need to consider/agree who is to pay for any surveyor.

Rent is one of the largest ongoing costs of running a business and is normally paid monthly in advance. Even if a lessee experiences financial difficulties, they must still pay the rent and use the premises only for the business stated in the lease. If the lease requires the lessee to keep actively trading in the lease period but they close the premises (including due to insolvency legislation and laws), it may be a breach of lease.

Changing the rent

The initial rent under a lease is commonly referred to as base rent. The lease must state when and how any change to the rent is to occur. If the lease says the rent is set at current market value, and the lessee and lessor cannot agree on the rent, then the Act provides a process for a specialist retail valuer to determine the rent. The NSW Small Business Commission appoints the valuer and the lessee and lessor share the costs equally. These costs can be upwards of $1,500 per party, however, and will vary depending on the valuer and matter. If either party seeks a review, then both parties may be required to pay for the costs of a further two valuers.

Outgoings are expenses of the lessor that the lessee has agreed to pay under the lease. They are usually major costs for the lessee. Lessors are able to negotiate recovery of fees for management, operation, maintenance or repair of the premises or land as part of the outgoings. Outgoings may include things such as land tax, cleaning, security, promotional fund levies, council rates, water charges, utilities, insurance, pest control, emergency services levy, management fees and audit fees. The outgoings should be included in the Disclosure Statement and it is important you understand these before signing the lease. Undisclosed outgoings might not have to be paid. Outgoings can go up by market rates over time. More information on outgoings .

‘Make good’ and end of term provisions

‘Make good’ provisions set out the obligations of the lessee before the lease ends, if any. Typically, these provisions require a lessee to return the premises to the lessor in an empty and neutral state, which is not necessarily a similar condition to that at the commencement of the lease. In some cases, make good involves a requirement for a lessee to strip back the premises to base building (or bare shell)condition and redecorate the premises (e.g. re-paint). It is important to agree to these provisions before signing the lease. Retail leases often include a clause which stipulates that where the lessor and lessee cannot agree on the make good costs, the President of the Australian Institute of Quantity Surveyors, or another industrybody, will nominate an independent certified quantity surveyor to make a binding determination about these costs.

The lease may include a provision requiring the lessee to take out certain insurance policies. Check these provisions and obtain quotes for any required insurance policies.

The lessor may ask for some form of security when negotiating the lease. This security may be: (a) a cash bond; (b) a third party guarantee, or (c) a bank guarantee.

Retail bonds are managed by NSW Fair Trading. See: fairtrading.nsw.gov.au/housing-and-property/renting/rental-bonds-online

If the lessee agrees to give the lessor a cash bond as security, the lessor must deposit the bond with NSW Fair Trading within 20 business days of receiving it. The main advantages of a cash bond are: it is held in trust by the NSW Government; there are no fees; it is for a specified amount; and there are rules for paying out the bond at the end of the lease.

Third party guarantees

This is a promise by a guarantor to pay the lessor compensation if the lessee breaks any of the terms of the lease. The person providing the guarantee can be sued and put their personal assets at risk should the lessee default.

Bank guarantees

This is a promise by a bank to pay the lessor an amount in compensation up to an agreed limit if you break the terms of the lease. The lessor has the right to cash in the bank guarantee or draw on it if the lessee breaches the lease or damages the premises. The lessor is usually not required to inform the lessee that they have drawn on the bank guarantee before they do it. A bank guarantee can have an expiry date or be unlimited. The lessor should release the bank guarantee within two months of the lessee leaving the premises unless they owe money.

Lessors and lessees may wish to get a valuation on the premises to check its market value. This can be done by hiring an expert valuer or by accessing specialist software. This will incur a cost.

Key money is any sort of non-refundable benefit, usually money, that the lessor asks for in exchange for the granting, renewal, extension or assignment of a retail lease. Key money does not include paying a cash bond or giving a guarantee. Lessors must not take key money for a retail lease.

Managing the lease and any issues during the lease

To best manage your lease and any issues that may arise during the lease, it’s recommended that you maintain your records with the following:

  • a copy of the signed lease;
  • a copy of the signed Retail Lease Disclosure Statement;
  • the condition report and any photos taken as part of this;
  • notes about discussions between the lessor, lessee or any relevant agents or advisers in case you need to refer to them.
  • Keep written records of your dealings with the lessor/lessee during the term of the lease.
  • Keep detailed records of any disruptions or damage so you can be specific about their impact.

Key dates to remember during the lease

These dates apply if the lessor uses a 1 July to 30 June financial year. If they don’t use the same financial year accounting system these dates will be different.

By 31 January

If in a shopping centre and the lessee contributes to a marketing plan or an advertising and promotion plan, they may ask to examine a written statement with details of advertising and promotion costs for the first six months of the previous accounting period (1 July to 31 December).

If the lessee pays outgoings the lessor must provide an estimate for the upcoming accounting period. In addition, if in a shopping centre and paying advertising and promotion expenses, the lessor must provide a written marketing plan for the proposed advertising and promotion expenses during that accounting period.

If in a shopping centre and the lessee contributes to a marketing plan or an advertising and promotion plan, they may ask for a written statement with details of advertising and promotion costs for the last six months of the previous accounting period.

By 30 September

The lessor must provide a written statement which has been audited, detailing the outgoings for the previous accounting period. The lessor must provide a sinking fund statement, where this applies. In addition, if in a shopping centre and the lessee contributes to a marketing plan or an advertising and promotion plan, the lessor must provide a written and audited statement with details on advertising and promotional costs.

By 31 October

The lessee and lessor should settle any under-payment or over-payment to adjust the actual outgoings for the previous financial year.

Potential issues that may arise during the lease

If any of the below issues arise, you should seek independent advice if you are unsure about what to do, and review your lease. For further guidance, you should also review the Act: legislation.nsw.gov.au/view/html/inforce/current/act-1994-046 .

Disruptions

Lessees should tell the lessor in writing as soon as possible about any disruptions impacting their business.

The Act requires the lessor to take all reasonable steps to avoid disrupting the lessee’s business. Lessees may be able to seek compensation, unless they were told about the disruption before starting the lease.

Keep detailed records of any disruptions so you can be specific about their impact. Consider seeking independent advice if necessary.

Repairs and damage

The lessee is often going to be responsible for repairs and maintenance under the lease. Retail and commercial leases can be very different to residential leases, which often require the lessor to do more of the repairs and maintenance.

If the lessor supplies any equipment, such as individual air-conditioning units, then it is also common for the lease to require the tenant to maintain that kind of equipment whilst they are in occupation. The lessor might also agree to replace the equipment if it breaks down completely. These things can be negotiated at the start of the lease and it is sensible for both parties to document all repair and maintenance obligations from the start.

If there is any damage to the premises or equipment supplied by the lessor, then the lessee (occupier of the property) should tell the managing agent (or the lessorif they are self-managing) about what has happened. This can often be a phone call in the first instance, but it’s also a good idea for the tenant to send photos and a description of what has happened in writing (by email, for example).

If there is significant damage that makes the property or part of the property unusable, then a common question from the lessee will be whether they have to keep paying rent in full. If the damage is caused by weather or other events that are out of the control of the lessee or the lessor, then a negotiated outcome where the lessee pays less rent, or no rent for a period of time whilst the damage is being repaired, is also quite common. Under the Retail Leases Act 1994 (NSW) there are provisions that describe each party’s rights when there are damaged premises. They include what happens with rent, notice requirements and termination if the premises cannot be repaired. Termination is not usually what a tenant with a long-term lease is looking for, so a mutually acceptable outcome can usually be negotiated. A mediator can always try to assist and can be arranged through the Mediation Services team.

Insurance should also be considered by both lessors and lessees and any contributions towards insurance premiums are usually detailed in the outgoings section of the lease. It is common for tenants to contribute towards building insurance premiums whilst they are in occupation and this is something that can be agreed before the lease starts.

Relocation notices

If a lessee receives a relocation notice, they should check whether the lease has a relocation clause. Further guidance on relocation .

If the lease has a relocation clause, the lessor must give the lessee at least three months’ notice in writing when they ask the lessee to move to another premises.

The lessee has one month to tell the lessor that they don’t want to move when they get the relocation notice.

If the lessee does not accept the new premises, the lease finishes at the end of three months from the original notice (or earlier if agreed).

Demolition notices

If a lessee receives a demolition notice, they should check whether the lease has a demolition clause and if the lessor has to compensate them for reasonable costs.

If the lease has a demolition clause, the lessor can end the lease to demolish the building or shopping centre if the work requires vacant possession of the premises. This applies whether all or part of the building is being

demolished. Demolition includes any major repair, renovation or reconstruction.

The lessor must give at least six months’ notice that the lease will end because of demolition. A lessee can end the lease during that time by writing to the lessor and giving at least seven days’ notice.

What happens if someone breaches the lease?

If a lessee or lessor does not abide by the lease then it may be a breach of the lease. For example, if the lessee doesn’t pay rent on time it is a breach of the lease. Similarly, if the lessor doesn’t do what is required of them under the lease, it is a breach of the lease. Where a party has breached the lease, the other party may recover any losses they experience because of the breach. Note that the non-breaching party must take reasonable steps to minimise their losses. In addition, certain breaches may entitle a party to terminate the lease. Seek legal advice if concerned.

What happens if the lessee has been locked out of the premises?

If a lessee has been locked-out of the premises, or received a letter or warning that the lessor or their agent is considering what is sometimes known as ‘re-entry’,‘repossession’, ‘eviction’ or ‘termination’ they should seek immediate independent legal advice on these warnings due to the potential impact on their business. Further guidance on lock-out disputes .

Improper conduct

Neither the lessee nor the lessor may engage in unconscionable conduct, or misleading or deceptive conduct. This is a complex matter that usually requires legal advice to make a successful claim.

Dispute resolution

The NSW Small Business Commission provides mediation services for disputes between the lessor and lessee of a retail lease. Mediation is an effective and cost-efficient way of resolving disputes, as a neutral mediator helps both parties try to negotiate a solution. If you need help resolving a dispute, you can submit an application for Mediation at no charge. A Mediation Officer will be allocated to your matter and will assist both parties. If the parties decide a mediation session could help, they share equally in the relatively low Mediator’s fee. For more information on mediation and the costs, visit: smallbusiness.nsw.gov.au/get-help/disputes/how-does-mediation-work .

The NSW Courts and the NSW Civil and Administrative Tribunal

If mediation is not successful you may be able to seek orders from a court or the Tribunal to resolve the dispute. Unlike mediation, the courts and tribunals focus strictly on legal matters and solutions. You can represent yourself at the Tribunal or engage a lawyer.

  • Try to resolve disagreements by discussion and negotiation wherever possible as this will be less costly and time consuming.
  • To find out more about you rights when facing these issues, visit our website at: smallbusiness.nsw.gov.au Or, call us on 1300 795 534. Read the full Retail Leases Act 1994 (NSW) at: legislation.nsw.gov.au/view/html/inforce/current/act-1994-046
  • If you need help to resolve a dispute and would like to access our mediation services, visit: smallbusiness.nsw.gov.au/get-help/disputes/how-does-mediation-work

What to do at the end of the lease

The lease will outline when the lease is due to end as well as whether there are any options to extend or renew the lease. As the end of your lease approaches it is important for lessors and lessees to discuss their options so that there can be a smooth transition.

What happens when a lease, without an option, ends?

If the lease does not have an option to extend or renew then when the lease ends, the lessor is free to find a new lessee..

The lessor must give the lessee written notice about whether they intend to offer the lessee a new lease or if they want the lessee to move out at the end of the current lease. This notification must be given at least six months before the lease expiry date and not more than 12 months before expiry.

If the lessor offers the lessee a new lease and the lessee does not accept it within one month, the lessor can withdraw the offer.

If the lessor doesn’t issue a notice telling the lessee whether there will be an offer of a new lease, the lessee should consider writing to the lessor before the lease ends to ask the lessor for this notice indicating their intentions. Otherwise, the lease may continue on a month-to-month basis.

The lease can be extended by up to six months from the time the lessor gives the lessee the notice.

The lessor does not have to negotiate a new lease, or an extension, and they can stop negotiations at any time. They must tell the lessee in writing that they havefinished the negotiations before they can advertise the premises for lease.

If no extension is offered or agreed between the parties then by the end of the lease you must vacate the shop, remove your belongings and ‘make good’ the premises as outlined in the lease.

The lessee should ask the lessor for an updated Disclosure Statement before they exercise the option to renew or extend the lease.

What happens if the lease has an option to extend or renew the lease?

A retail lease may include an option to renew or extend the lease.

Check the lease to see what you need to do to exercise the option and when it needs to be done.

If the lessee wants to take up the option, they must normally tell the lessor in writing during the ‘option exercise window’ stated in the lease. If the lessee misses the last date to exercise the option, they will probably lose the right to the option.

More information on lease options.

Rent changes resulting from a lease extension or renewal

If the option to extend or renew the lease states that the rent changes to current market rent, the lessee may ask the lessor in writing to outline what the new rent will be. The lessee may send this request to the lessor before the time to exercise the option starts, usually nine to six months before the end of the lease.

If the lessee and lessor cannot agree on the current market rent, then the Act provides a process for a specialist retail valuer to determine the rent. The Registrar of Retail Tenancy Disputes appoints the valuer and the lessee and lessor share the costs equally.

These costs can be upwards of $1,500 per party, however, will vary depending on the valuer and matter. If either party seeks a review, then both parties may be required to pay for the costs of a further two valuers.

Once the current market rent is agreed or determined, the lessee has up to 21 days to exercise the option. If the lessee misses the date to exercise the option, they will probably lose the right to the option.

Continuing the lease on a month-to-month basis

Almost all leases give the lessee an opportunity to ‘hold over’ the lease and stay in the premises on a month- to-month basis at the end of the fixed term period. The lessee becomes a ‘periodic lessee’ or ‘lessee at will’ and in this situation, either the lessee or the lessor can end the lease with one month’s notice.

Be aware that some franchise and licence to sell agreements require a lease not to be month-to-month.

It can and does happen that lessees are unable to sell their business because their lessor is able to choose to terminate the month-to-month lease and a buyertypically wants a longer term lease.

It is good business practice to actively seek to negotiate a new lease with a new fixed term before the lessee transitions into a month-to-month lease unless they are seeking premises elsewhere. More information on lease hold overs and renewals .

Are you required to ‘make good’ the premises at the end of the lease?

‘Make good’ provisions set out the obligations of the lessee before the lease ends, if any.

Typically, make good provisions require a lessee to return the premises to the lessor in “original condition”, which may mean returning the property to the condition it was in when it was first built. In many cases, make good involves a requirement for a lessee to strip back the premises to base building (or bare shell) condition and redecorate the premises (e.g. re-paint). Ideally, you may be able to refer to the condition report prepared at the beginning of the lease.

If the lessee is vacating the premises they must be sure to leave enough time to remove any property and restore the premises to the state agreed in the lease. Alternatively, lessee’s often agree to a payment to the lessor in lieu of the lessee carrying out the make good, leaving it to the lessor to carry out as necessary. Lessees can try negotiating with the lessor for this arrangement. If lessees don’t carry out the make good, they will normally be liable to pay the lessor’s costs.

Retail leases may include a clause which states that if the lessor and lessee cannot agree on the make good costs, the President of the Australian Institute of Quantity Surveyors (AIQS), or another industry body, will nominate an independent certified quantity surveyor to make a binding determination about these costs.

Selling the business

If the lessee decides to sell their business, they will often need to transfer (assign) their lease to the buyer (the assignee). So, there are two transactions that may need to occur – a sale of business and a transfer of lease. Asking the lessor to agree to the assignment of the lease involves giving information to the lessor and tothe new lessee, in order to be released from the financial obligations of the lease. Under the Act, an Assignors Disclosure Statement is to be provided to the lessor when a lessee is requesting the lessor to consent to the assignment (transfer) of a lease. A copy should also be given to the assignee (proposed new lessee). A copy of this statement is available here .

You should also consider getting independent advice. More information on transferring your lease .

If the lessee is vacating the premises be sure to leave enough time to remove any property and restore the premises to the state agreed in the lease (see sections 2 and 4 of this Guide which refer to ‘make good’ provisions).

Collecting property after the lease has ended

Usually, unless the lease states otherwise, the property the lessee brings into the premises remains the lessee’s property after the lease has ended. The lessor has to give the lessee reasonable opportunity to remove their goods, whether the lease has expired, or it has ended early because of a breach of the lease terms. The lessee should contact the lessor and arrange a suitable time to collect their goods. Lessees may be liable to the lessor for compensation or damages for leaving their goods at the premises if this has not been agreed. Further guidance on lessee’s right to enter a property after a lease ends .

Checklist for lessees and lesssors

Checklist for lessees.

  • Look around for a suitable premises and consider talking to other retailers, independent real estate agents, valuers or relevant industry bodies.
  • Consider seeking legal and financial advice prior to signing a lease. Ensure you read the lease and other lease documents (e.g. Disclosure Statement) thoroughly and highlight any parts which are unclear and seek clarity on these.
  • Ensure the property is suitable/appropriate for conducting your business for the duration of the lease.
  • Understand what the lease allows you to do (the permitted use) and also what other licenses or permits might be required (e.g. from local council or other authorities).
  • Ensure it is clear what the rent is and how it can be increased and that this is clearly outlined in the lease.
  • Ensure the area to be leased is clearly defined in the lease documents.
  • Note the deadline by which you must exercise an option, if you have one.
  • Be aware of any security payments required (e.g. cash bond, third party guarantee, or bank guarantee).
  • Obtain a copy of the Disclosure Statement at least seven days before you begin a new lease or renew a lease.
  • Ensure you fully understand what costs you have agreed to, such as outgoings, fit-out costs and other occupancy costs as well as the make good provisions at the end of the lease.
  • Understand who is responsible for maintenance and repairs of the building and infrastructure, plant and equipment, air conditioner etc.
  • If the premises is in a shopping centre, make sure you are aware of some of the unique requirements related to renting in a shopping centre.
  • Before taking possession, consider doing an inspection/condition/dilapidation report (including photos) that both the lessor and lessee sign.
  • Take possession of the premises after the lease has been prepared and signed.

Checklist for lessors

  • Consider seeking legal and financial advice when preparing a lease document, including to ensure it complies with the relevant legislation.
  • Conduct appropriate enquiries to understand the financial capacity of the lessee.
  • Provide a copy of this guide as soon as lease negotiations commence.
  • Provide full details to the proposed lessee of all outgoings they are agreeing to pay under the lease.
  • Be clear about who is responsible for the maintenance and repair of particular items (e.g. air conditioning, roof, structural issues).
  • Clarify what will happen if there is a breach of lease, and what termination clauses are agreed.
  • Provide the lessee with a copy of the lease within three months after it has been signed by the lessor.
  • Register a lease longer than three years with NSW Land Registry Services within three months of the lease being signed by both parties.
  • Hand over possession of the premises after the lease has been prepared and signed.

Glossary of key terms

Disclosure statement.

A list of information, as required under the Act, that lessors and lessees must sign before entering into the lease. There are two parts to the Disclosure Statement: (a) Part A, known as the Lessor’s Disclosure Statement, which is signed by the lessor and must be provided to the lessee at least seven days before the commencement of a lease; and (b) Part B, known as the Lessee’s Disclosure Statement, which is signed by the lessee and must be provided to the lessor within seven days after receipt of Part A.

Lessee (Tenant)

The tenant of the leased premises.

Lessor (Landlord)

The owner of the leased premises, who grants a lease to the lessee (tenant).

You are on ‘hold over’ if you continue to occupy the premises after the expiry of the fixed term where the lessor has not taken action to end the lease. Leases often give the lessee an opportunity to ‘hold over’ under the lease and stay in the premises on a month-to-month basis. Under this arrangement either party can terminate the lease with one month’s notice. See also: hold-over, holding over period, month-to-month, monthly tenancy, week-to-week, weekly tenancy, tenancy at will.

The obligation of a lessee at the end of their lease to ensure that their premises are returned to the condition it was first built, the same condition as at the start of the lease, or some other condition as specified in the lease. For example, the make good obligations may include re-painting or restoring partitions. Note: ‘cold shell’ or ‘warm shell’ are sometimes used in shopping centres, where you may need to take all services back to capped points, and install hoarding when the shop front is removed.

A confidential process in which the participants, with the support of the mediator, identify issues and commercial interests, develop options, consider alternatives and make decisions about future actions and outcomes. Mediation is a cost-effective and quick way to settle disputes. The NSW Small Business Commission provides mediation services.

Typically an option in a lease is a right for the tenant to call for a new lease with the same terms as their current lease, for a new fixed period of years, removing (striking out) the option that was used, and resetting the rent by a specified method. An option in a lease usually means an extra period that the lessee has the right to occupy the premises, in addition to the initial fixed term of the lease. For example, a lease with an initial fixed term of two years may have two options which will allow the lessee to stay for a further three years. A lessee may choose whether to ‘exercise’ or take up an option. Any option should be documented in the lease (in writing). The deadline for exercising an option is usually some months prior to the end of the lease (not the last day of the lease). If you miss that deadline, you lose the option.

The costs incurred by the lessor in operating and maintaining the leased premises which are typically passed on to the lessee. As such these are usually referred to as ‘lessor outgoings’ (i.e. separate to outgoings of the business itself). The responsibility for paying these outgoings is to be negotiated between the lessor and lessee and should be outlined in the lease. Examples may include council and water rates, repairs and maintenance and management fees. The Retail Leases Act 1994 (NSW) impacts on what outgoings may be charged to the lessee.

The duration of the fixed term of the lease, being the minimum amount of time that a lessee may remain at the premises. A lease agreement may also provide options to renew or extend the lease term.

This document has been developed in consultation with a range of industry bodies including:

  • Australian Institute of Quantity Surveyors aiqs.com.au
  • Australian Retailers Association retail.org.au
  • Business NSW businessnsw.com
  • CPA Australia cpaaustralia.com.au
  • National Retail Association nra.net.au
  • Newsagents Association of NSW and ACT Ltd nana.com.au
  • Restaurant and Catering Australia rca.asn.au
  • Shopping Centre Council of Australia scca.org.au
  • The Law Society of NSW lawsociety.com.au

Other guides from the NSW Small Business Commissioner

Get back to business - a guide to recovering from disaster, prepare for the unexpected - build a business continuity plan, selling to the nsw government guide 2023, nsw small business commissioner mediation guide.

IMAGES

  1. Transfer Of Lease Form Nsw

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  2. Lease Agreement Nsw Template Free

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  3. Lease Transfer Letter Template

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  4. How to complete the NSW property transfer form

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  5. Transfer Of Lease To New Owner Form

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  6. lease agreement nsw fill out and sign printable pdf template signnow

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VIDEO

  1. 5 Things to Know about the Govt Standard Lease Form

  2. Is there a standard lease form? (Ontario Landlords Network)

  3. Preparing a residential lease agreement

  4. Residential Lease Agreement

  5. How to Fill Out Residential Lease Agreement Online

  6. How to Fill in Standard Residential Lease Agreement

COMMENTS

  1. Transfer of lease, mortgage or charge

    Dealing type TL (transfer of lease or sublease) TM (transfer of mortgage or sub-mortgage) TC (transfer of charge) Stamp duty - required for a transfer of lease or sublease. Any alteration to the consideration must be marked. Not required for a transfer of mortgage, sub-mortgage, or charge. Certificate of Title - required for:

  2. eLodgment

    the transfer of lease is dated before the expiry date of the lease and: the lease expired less than 12 months ago or the lease contains a current first option to renew or is within 12 months of expiry period or within a current first option to renew term, and is accompanied by a Variation of Lease extending the term.

  3. Insert Duties Assessment No. as issued by Revenue NSW Office. Duties

    Form: 01TL TRANSFER OF LEASE Release: 4·4 MORTGAGE OR CHARGE New South Wales Real Property Act 1900 Leave this space clear. Afix additional pages to the top left-hand corner.

  4. PDF Standard form from 28 September 2020 Residential tenancy agreement

    This form is your written record of your tenancy agreement. This is a binding contract under the Residential Tenancies Act 2010, so please read all terms and conditions carefully.

  5. Transfer and sub-letting

    With the landlord's written consent, you can: transfer your tenancy under a tenancy agreement to another person, or sub-let the premises (or part) to another person. The landlord must not unreasonably withhold consent when: you ask to transfer and one of the original tenants under the current tenancy agreement will remain as a tenant, or

  6. PDF Declaration for Urgent Stamping of Transfers and ...

    The transfer/assignment of lease relates to Lease Registered No. over the property known as (Description of leased property) being the land comprised in Folio Identifier 4. The amount of $ referred to in the transfer/assignment of lease is the only monetary consideration for the transfer/assignment of the lease See note 1 on the back page

  7. General statement for transfer duty and leases

    15 August 2022 The creation and extinguishment of dutiable property which includes leases is dutiable unless exempt or excluded. Excluded items include the grant, renewal or variation of a lease for no consideration and any transactions prescribed by the Regulations.

  8. Transfer duty

    From 1 July 2016, the NSW government abolished transfer duty on the sale of business assets, including intellectual property, goodwill and statutory licences. However, you still must pay transfer duty on any land the business holds. Duty will be assessed on the value of the land, including leasehold interests, fixtures and goods.

  9. PDF Transfer of oyster lease

    13/V1 When is a transfer of an oyster lease required? The transfer of an oyster lease is required when the current lessee sells a lease to another party. The transfer of the lease, if consented to by the Minister, formalises the change in ownership of the lease. A joint application from both parties is required. Transferee or transferor?

  10. CPN 027: Leases and change in beneficial ownership

    Section 8 (3) of the Act defines the change in beneficial ownership to include the creation and the extinguishment of dutiable property. This will include the grant of a lease of land in NSW unless there is an exclusion or an exemption. Leases granted without a premium or other (monetary or non-monetary) consideration generally will not attract ...

  11. Schedule of eDealings

    Transfer of lease, mortgage or charge - form 01TL: A transfer of a registered lease, mortgage or charge by the lessee, mortgagee or chargee. 21 Dec 2020: 22 Mar 2021: Priority notice: Provides protection of priority of registration for proposed dealings intended to be lodged. It is valid for 60 days. Sections 74T, 74U, 74V and 74W Real Property ...

  12. Tenant transfers

    You need to fill in an Application for Transfer and Mutual Exchange - Public Housing Tenants Only DH3003 form or an Application for Transfer ... If you are eligible for transfer, your name will be added to the NSW Housing Register. The waiting time will depend on the reason you are seeking transfer and the number of suitable properties that ...

  13. Transfer a lease

    The Consent of the Minister to the Transfer of a Lease cannot be granted if the lease account is in arrears. Any arrears will need to be paid in full. What you need to apply. The following supporting documentation will need to be submitted with the online application form depending on the nature of the transfer.

  14. Transferring a Lease to a New Business Owner

    According to the recent NSW Court of Appeal decision of Lockrey v Historical Houses Trust of NSW the lessor can only request specific documents such as financial statements and tax returns for a specific period; 3. If the outgoing lessee (or any guarantor) wishes to be protected from ongoing liability under the lease it must give a copy of a ...

  15. I'm Selling a Business. How Do I Transfer the Lease?

    Assigning the lease involves the seller transferring their rights under the lease to the purchaser through a deed of consent to and assignment of lease (Deed of Assignment). The deed is a legal document that places the new tenant in the shoes of the former tenant for the remaining term of the lease. The new tenant must comply with all of the ...

  16. Forms

    Property services forms Rental bond Residential land lease communities Residential tenancy Strata schemes Tow truck forms Accessing NSW Fair Trading information (GIPA Act)

  17. NSW

    22/02/2019. 0 comments. The following forms are now available as interactive PDFs: Land Registry Services. Transfer - Form 01T (LL-NSW-RPA081) Transfer without monetary consideration - Form 01TWC (LL-NSW-RPA082) Lease - Form 07L (LL-NSW-RPA083) Request for CoRD holder consent - transacting party (LL-NSW-RPA089) Request for C0RD holder consent ...

  18. Sharing a rented home

    A tenant must obtain a landlord's written permission to sub-let or transfer any part of the property. If a tenant does this without consent, they are breaching the terms of the tenancy agreement.

  19. Australia: A refresher on lease duties in New South Wales

    As with an LPI 'Transfer of Lease' form, an LPI 'Surrender of Lease' form must be submitted to OSR for assessment and stamping before being lodged at LPI. ... Under section 65(16)(d) of the Duties Act 1997 (NSW), premiums paid for leases of premises in retirement villages within the meaning of section 5 of the Retirement Villages Act 1999 (NSW ...

  20. Starting a rental lease

    If your rental application is accepted, the landlord or agent will usually ask you to: sign a lease, also known as a residential tenancy agreement. pay a rental bond. pay up to 2 weeks' rent in advance. complete and return the condition report within 7 days of signing the lease. The lease is a legal document that outlines all the rules and ...

  21. PDF TENANTS RIGHTS FACTSHEET 18 Transfer and sub-letting

    fairtrading.nsw.gov.au or phone 133 220) or Legal Aid NSW / LawAccess NSW (see legalaid.nsw.gov.au or phone 1300 888 529). The person who rents part of the premises from a head-tenant under a written tenancy agreement is a sub-tenant. They have the rights and obligations of a tenant in relation to the head-tenant, who is their landlord.

  22. Retail Tenancy Guide

    A retail lease is a legally binding contract between the lessor and lessee for the use of the premises where the lessee conducts their retail business. A retail lease cannot override the requirements of the Retail Leases Act 1994 (NSW). The lease must be provided to a potential lessee at the negotiating stage by the lessor.