South Australia retail and commercial leasing changes – How landlords can protect their leases

More commercial leases now fall under SA’s retail and commercial leasing rules, as the annual rent threshold recently jumped by $20,000.

On 1 July 2025, with the commencement of the Retail and Commercial Leases (Prescribed Threshold) Amendment Regulations 2024, the “prescribed threshold” under the Retail and Commercial Leases Act 1995 (RCLA) increased from $400,000 per annum (exclusive of GST) to $420,000 per annum (exclusive of GST).

The prescribed threshold is one of the determining factors as to whether the RCLA applies to a lease and protects the tenant. If the rent is above the threshold, the RCLA does not apply. The intention is that if a tenant is paying an annual rent above the prescribed threshold, it is not likely to be the type of small business the RCLA is aimed at protecting.

This increase – the first review of the threshold conducted by the Valuer-General since the 2019 reforms – is already in effect and may not yet have come to the attention of some landlords and tenants. With reviews now required every five years, it is expected that the threshold will continue to be adjusted on a more frequent basis. Until now, the threshold had only been increased once in the history of the legislation, from $250,000 to $400,000 in 2011.

The amendment means that new leases entered into after 1 July 2025 with a commencing annual rent of between $400,000 (exclusive of GST) and $420,000 (exclusive of GST) are now captured by the RCLA (where they would not have been previously). Existing leases where the annual rent falls within that range are also captured — due to the fluctuating application of the RCLA.

For example, where the annual rent under an existing lease was $410,000 per annum (exclusive of GST), the RCLA would not have applied at 30 June 2025, but commenced applying on 1 July 2025 with the increase to the threshold. This prevents the landlord, on and from 1 July 2025, from amongst other things:

• recovering land tax,
• relying on a ratchet clause, or
• requiring a tenant to undertake capital expenditure.

Landlords who don’t want to get caught out by this fluctuating application should act quickly. The RCLA can be excluded (and ensured not to apply for the whole term, despite any increase in the threshold) under section 4(3). To obtain the exclusion, the landlord must:

• lodge the lease for registration within 3 months of execution, and
• provide the tenant with written notice within 1 month of lodgement.

This is a timely reminder for landlords and tenants in South Australia to carefully review their lease arrangements in light of the new threshold.

If you have any queries about the increase to the prescribed threshold or any other leasing matters, please do not hesitate to get in touch with our expert property and development team.