It’s the happiest day on the calendar – rent review time. The landlord’s notice – with an optimistically high opinion of the current market rent – comes in, and is often misfiled or forgotten about. I have seen this happen with clients many times. In the past, if the lease said that if the tenant wanted to have a valuer fix the market rent it only had 30 days to object to the notice, it was basically game over for the tenant if the tenant didn’t object in time. It was then stuck with the figure in the landlord’s notice. Well that is until now…
VCAT has now held that these types of clauses are invalid in a lease covered by the Retail Leases Act 2003 (Vic). The Act allows rent reviews to be on certain specified bases. These include fixed percentage, CPI, fixed annual amount, or a market rent determined either by agreement, or by a valuer. VCAT held that a clause which simply imposed the new rent nominated by the landlord on the tenant, was not one of these bases and was therefore void, even where the tenant failed to object to the landlord’s notice within the time specified by the lease.
This decision is a real help to tenants for when these notices are misplaced or go astray. However, still take caution, as there is a hint in the VCAT judgment that a landlord may be able to avoid this outcome by careful drafting! If you find yourself in this situation or want more information, feel free to get in touch with David Brown on (03) 8600 8828 or dbrown@kligers.com.au
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