South Australia Commercial Lease Requirements

The Retail and Commercial Leases Act 1995 (SA) imposes specific structural requirements on commercial leases, most notably the mandatory minimum 5-year lease term for retail shop leases. Understanding these requirements is essential for both landlords and tenants.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Always consult a licensed solicitor in South Australia for advice specific to your situation. Information last verified: March 2026.

The 5-Year Minimum Term

For retail shop leases covered by the Act, the total term of the lease (including any option periods) must be at least 5 years. This provision is designed to give small business tenants the security they need to establish and grow their operations.

Example: A landlord can offer a 3-year initial term with a 2-year option to renew (3 + 2 = 5 years minimum).

Exceptions to the 5-Year Minimum

The minimum term does not apply if:

• The tenant has received independent legal advice about the effect of waiving the minimum term, and a certified exclusionary clause is included in the lease.
• The lease is for a term of 6 months or less.
• The tenant is a publicly listed company or a subsidiary of one.
• The lease is for certain specific short-term or seasonal uses.

Written Lease Required

While there is no absolute statutory requirement that every commercial lease be in writing, practically all commercial leases in SA are in writing. Given the complexity of commercial terms (outgoings, fit-out, make-good, rent reviews), an oral commercial lease would be virtually unenforceable.

Essential Clauses

A comprehensive SA commercial lease should include:

1. Permitted Use: The specific business activity the tenant is authorised to conduct on the premises.
2. Rent and Rent Review: The initial rent, payment frequency, and the exact methodology for future rent reviews (CPI, fixed percentage, market review).
3. Outgoings: A clear, itemised list of which operating expenses the tenant must contribute to (noting that land tax cannot be recovered from tenants under the Act).
4. Security Bond / Bank Guarantee: The amount and form of security required.
5. Maintenance and Repairs: A clear delineation of which repairs are the landlord's responsibility (typically structural) and which are the tenant's (typically internal fit-out and fixtures).
6. Make Good Obligations: What the tenant must do to restore the premises when the lease expires (e.g., remove fit-out, repair walls, repaint).
7. Assignment and Subletting: Under what conditions the tenant can transfer the lease or sublet part of the premises.
8. Option to Renew: Any options for the tenant to extend the lease beyond the initial term.

Land Tax Prohibition

A distinguishing feature of SA commercial law is that landlords cannot recover land tax from tenants under the Retail and Commercial Leases Act. This is a cost the landlord must absorb. Any lease clause requiring the tenant to pay land tax is void.

Best Practices

• Always Use Experienced Commercial Solicitors: Commercial lease drafting is a specialised discipline. Never use a residential lease form or a generic template for a commercial tenancy.
• Obtain Certified Exclusionary Clauses (If Applicable): If both parties genuinely want a lease term shorter than 5 years, ensure the tenant obtains independent legal advice and the solicitor provides the necessary certificate.

How Landager Can Help

Landager stores all your commercial lease agreements centrally, allowing you to instantly verify permitted use clauses, check option renewal dates, and confirm make-good obligations. Our system tracks the critical 6-to-12-month renewal negotiation window required under the Act, ensuring you never miss a compliance deadline.

Back to South Australia Commercial Laws Overview.