Monday 23 March 2020

Farming and agricultural leases confirmed as not part of the Retail Leases Act 2003 - what is covered and what will this mean to you?

The Minister for Small Business has made a determination that the Retail Leases Act 2003 does not apply to leases of farm premises for commercial farming or agricultural purposes.

What farming and agricultural leases are covered by this exclusion?

The Minister's determination confirms that a lease will not be caught by the Retail Leases Act 2003 if the lease is to use the premises wholly or predominantly for any of the following activities for commercial gain:

  • Agricultural, pastoral, horticultural or apicultural activities
  • Poultry farming, dairy farming, aquaculture, tree-farming or any business that consists of the cultivation of soils, the gathering of crops or rearing of livestock
  • Grazing, including agistment
  • Activities prescribed as a farming operation for the purpose of the Farm Debt Mediation Act 2011. At this time there are no farming operations prescribed under that Act.

This exclusion is likely not to extend to tenants who lease farm land to carry out retail sale of goods and services to the public, so that the lease cannot be said to be wholly or predominantly for one or more of the above activities.  For example, leased premises used for operating cheese stores or winery cellar doors open to the public in some circumstances.

The exclusion will also not extend to tenants who are not operating for commercial gain. E.g. Hobby farming; for charitable or public purposes.

This exclusion takes effect from 29 October 2019, and all leases entered into or renewed from that date.

What does this mean for you?

In negotiating a new farming or agricultural lease, landlords and tenants should consider whether the tenant's proposed operations on the land meet the criteria of the exclusion set out above.  Amendments can then be made to the proposal depending on whether the parties would like the Retail Leases Act 2003 to apply.

When preparing or re-negotiating the lease, the permitted use under the lease should be appropriately drafted to ensure the lease is not captured by the Retail Leases Act 2003

For advice and assistance, please contact:

Margaret Marotti
Managing Principal Solicitor
Ph: 9947 1410

Lauren Walley
Senior Solicitor
Ph: 9947 1454