What are retail premises?
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The definition of a retail premises
The Retail Leases Act 2003 (the Act) defines retail premises as a premises (as defined in the lease details) that is used wholly or predominantly for:
- the sale or hire of retail goods or provision of retail services or
- the carrying on of a specific business or a specified kind of business that the Minister determines, under section 5, based on the kind of business, tenant or lease.
The application of the Act may be affected by how premises may be used under the term of the lease. The coverage provided by the Act is important as there are key differences between a commercial and retail lease. Examples include the following:
- Under a retail lease, a tenant can’t be required to pay land tax or capital costs.
- Under a retail lease, a tenant doesn’t have to pay outgoings unless they are provided with an annual estimate of outgoings beforehand.
In 2017, two court cases considered the definition of ‘What are retail premises?’. The cases confirmed that the Act may apply to leased premises where they are used for selling goods or services to other businesses.
For example, premises that are leased for:
- the sale of flour to a bakery that uses the flour to make bread and pastries
- the provision of car repair services to a car hire company that uses the repair services for its fleet of vehicles
- the provision of legal or accounting services to a university that uses those services in its administration
- the sale of shelves to Myer or David Jones for them to display their goods
- the sale of mixed concrete to a builder who uses the concrete to construct a driveway.
The Victorian Court of Appeal decision in IMCC Group (Australia) Pty Ltd v CB Cold Storage Pty Ltd  VSCA 178 interpreted the Act to confirm that any premises used for supplying commercial services to other businesses are covered by the Act. The County Court’s decision in the case of Access Solutions International Pty Ltd v Gamet Pty Ltd  VCC 1563 followed the CB Cold Storage Decision.
In both of these cases the premises were used for supplying services to other businesses as ‘ultimate consumers’ of those services and as such, are covered by the Act.
Landlords and tenants who have a commercial lease may be unaware of the implications of these two court cases. The Act may apply to any premises that is used for selling goods to an end user, including another business.
For more information, refer to the VSBC guidelines to the Retail Leases Act 2003. Alternatively, see section 4 of the Retail Leases Act 2003.
For more information, you can speak with a member of our team by calling 1800 878 964 or emailing us.