The classification of your lease changes your rights, your obligations, and the laws that apply to you – often in ways that carry significant financial consequences. Many tenants assume this is a straightforward question. It is not.
Why the Difference Matters
Retail leases in Victoria are governed by the Retail Leases Act 2003 (Vic) (RLA 2003), which provides tenants with statutory protections that simply do not exist under a commercial lease. These include restrictions on what outgoings a landlord can charge (including a prohibition on passing land tax to a tenant), mandatory disclosure obligations, a minimum five-year term, a cooling-off right when exercising an option to renew, and access to low-cost mediation through the Victorian Small Business Commission before any VCAT application.
A commercial tenant has none of these protections. Their rights depend entirely on what the lease says – which is typically prepared by the landlord's lawyers. In cases where a lease is later found to be retail, landlords have been required to reimburse years of incorrectly charged land tax, in amounts exceeding $160,000.
The Step-by-Step Test
Step 1 – Do any express exclusions apply?
The RLA 2003 does not apply if any of the following are true:
- The lease term is less than one year (though if the tenant remains in continuous possession beyond 12 months, the Act will apply from that point).
- Total occupancy costs exceed $1,000,000 per annum exclusive of GST – check the Retail Leases Regulations 2023 (Vic) for the precise calculation.
- The tenant is a listed corporation or subsidiary of a listed corporation.
- The tenant operates as the landlord's employee or agent.
Step 2 – Do any Ministerial Determinations exclude the lease?
The Minister has power under section 5 of the RLA 2003 to exclude certain classes of premises. Currently eight determinations are in force. The most commonly relevant exclude premises above the first three storeys of a building, leases of 15 years or more with substantial tenant obligations, and premises used for charitable, farming or community purposes. Check the VSBC website for the current list before advising on any lease.
Step 3 – Is the tenant providing retail goods or services?
If no exclusion applies, the question becomes whether the premises are 'retail premises' under section 4(1) of the RLA 2003 – used wholly or predominantly for the sale or hire of goods by retail, or the retail provision of services. The test is broader than it appears.
In W.G.Z Pty Ltd v Arva Investments Pty Ltd [2024] VCC 1777, Judge Kirton summarised the relevant elements: the nature of goods or services offered; whether a fee is paid; whether they are available to anyone willing to pay; whether the ultimate consumer test is satisfied; whether the premises are open to the public; and whether the test is met at the time the lease is entered into.
Cases That Show How Wide the Net Is Cast
IMCC Group v CB Cold Storage [2017] VSCA 178
Cold storage warehousing – found to be retail.
Volk Road 2020 Pty Ltd v John White Pty Ltd
A warehousing and storage business – found to be retail despite a lease clause stating the Act did not apply.
Wellington v Norwich Union [1991] 1 VR 333
A patent attorney engaged by solicitors for their clients – found to be providing retail services.
Fitzroy Dental v Metropole [2013] VSC 344
A conference centre bookable by the public – found to be retail premises despite not being a walk-in shop.
Bulk Powders v Seicon [2018] VCAT 2000
A protein supplement business with no public signage and entry by appointment only – not retail.
Can You Draft Around the Act?
A permitted use clause can restrict retail activity to ancillary use and prevent the RLA 2003 from applying – but only if that restriction genuinely reflects the parties' agreement. Under section 94 of the RLA 2003, any provision that purports to exclude or is inconsistent with the Act is void. In Grand View Trading v SJV Properties [2025] VCAT 545, the Deputy President confirmed such clauses can work but warned they must reflect the true commercial bargain – not be used as a drafting device to contract out of the Act.
The Practical Checklist
- Is the lease term under one year?
- Do total occupancy costs exceed $1,000,000 per annum (ex-GST)?
- Is the tenant a listed corporation or subsidiary?
- Does a Ministerial Determination exclude these premises?
- Does the tenant provide goods or services to an ultimate consumer for a fee?
- Are the premises open to the public in the required sense?
- Does the permitted use in the lease reflect the actual intended use?
This article is general information only and does not constitute legal advice. Contact Abbots Legal for advice specific to your situation.