One of the most common disputes between retail tenants and landlords is: who pays for repairs?
The answer depends on the terms of your lease, the nature of the repair (structural vs. non-structural), and state-based retail leasing legislation.
Misunderstanding your obligations can lead to costly emergency repairs or breach notices. This article clarifies responsibility for maintenance, repairs, and make good obligations under Australian law.
General Principle: Landlord Owns the Building, Tenant Owns the Fit-out
Unless the lease says otherwise, the common law position is:
- Landlord responsible for: Structural elements (roof, foundations, external walls, load-bearing columns, plumbing and electrical mains, fire safety systems).
- Tenant responsible for: Internal fit-out (carpet, paint, partitions, light bulbs, internal doors, shopfront glass if exclusive use area), routine cleaning, and minor repairs (leaking tap washer, broken window latch).
However, most commercial leases heavily modify this default position – often shifting more costs to the tenant.
State Retail Leases Acts – Minimum Standards
Several states impose statutory repair obligations that cannot be contracted out of:
- NSW (Retail Leases Act 1994, s64): Landlord must maintain the building in a condition consistent with the lease's permitted use. Tenant responsible only for damage caused by their own negligence.
- VIC (Retail Leases Act 2003, s52): Landlord must maintain the building's structural integrity and facilities (toilets, lifts, air conditioning). Tenant responsible for light bulbs, carpet cleaning, and internal paint.
- QLD (Retail Shop Leases Act 1994, s46C): Landlord must not pass on costs for capital replacement (e.g., replacing a worn-out air conditioning unit). Tenant pays only for routine maintenance.
- WA, SA, ACT, TAS, NT: Similar protections but check local legislation – some have weaker tenant protections.
Typical Lease Clauses and Their Traps
Landlords often insert clauses like:
- 'Tenant to keep premises in good repair' – This is extremely broad. Under common law, 'good repair' could require you to repaint the exterior or fix the roof. Negotiate to change it to 'tenant to keep internal non-structural parts in good repair, fair wear and tear excepted'.
- 'Tenant indemnifies landlord for all maintenance costs' – This shifts everything to you. May be void if it contradicts state legislation.
- 'Air conditioning – tenant to pay 100% of repair and replacement' – Replacement (capital cost) should be the landlord's responsibility. Negotiate to 'tenant pays routine servicing only'.
Emergency Repairs and Access
If a burst pipe floods your stock, who acts? The landlord has the right (and duty) to enter the premises with reasonable notice (24–48 hours) for emergency repairs.
You cannot lock them out. However, for non-emergency repairs (e.g., repainting exterior), the landlord must give at least 7 days' notice and compensate you for any trading disruption (unless the lease waives this).
Depreciation and Capital Replacement
A growing area of dispute is the distinction between 'repair' (maintaining existing condition) and 'replacement' (new asset).
Under accounting standards (AASB 116), a new roof or new air conditioning system is a capital improvement – usually the landlord's cost.
However, some leases require the tenant to contribute to a 'sinking fund' for future capital replacement.
These are legal but must be disclosed in the Lessor Disclosure Statement.
Pro tip: Before signing a lease, obtain a building inspection report. Identify existing defects (cracked walls, leaking roof, old electrical wiring). Attach photos to the lease as a 'Schedule of Condition'. This prevents the landlord from charging you for pre-existing damage at lease end.
Practical Steps When a Repair Is Needed
- Notify the landlord in writing (email is fine) with photos. Keep a log of dates.
- If the landlord refuses to repair a structural defect, you may have the right to repair and deduct from rent (common law 'repair and deduct' remedy – but risky without legal advice).
- For urgent health or safety issues (electrical fault, gas leak), you can arrange immediate repairs and invoice the landlord. Document everything.
- Dispute resolution: Apply to NCAT/VCAT/QCAT for an order requiring the landlord to repair.
In summary, do not assume the lease reflects your expectations. Hire a solicitor to explain each repair clause before signing.
And never, ever sign a lease that says 'tenant accepts the premises in its current condition – as is, where is' – that could waive all landlord repair obligations.