How Qld Leasing is Changing in 2025
- Nadine Wismayer
- Mar 18
- 5 min read
There are significant changes incoming for both landlords and tenants of commercial leases as part of the sweeping changes introduced by the Property Law Act 2023, which comes into force on 1 August 2025.
New Procedures for Lessor’s Consent
There are any number of things that a lessee might need to seek the landlord’s consent to do in a commercial lease.
This typically includes assigning the lease, sub-letting the premises, changing the permitted use under the lease, altering the premises or carrying out various types of work.
Currently the procedure to seek the landlord’s consent for these things and how the landlord is to consider them are generally covered by the terms of the lease.
However, section 142 of the Property Law Act 2023 introduces a new procedure that is to be followed to seek the landlord’s consent in relation to these matters.
The procedure is:
1. the lessee is to give the lessor a proposal notice, which sets out any information required under the lease and asks for consent to do the thing in question;
2. if the landlord believes more information is needed to make a decision, the landlord can ask for it;
3. the landlord must give a decision within 1 month (or longer if agreed) after receiving the full particulars of the proposal in question. The decision notice must state any conditions attached to the consent and the reasons for them. If the landlord is refusing consent, the decision notice must give the reasons.
The lessor must not unreasonably withhold consent.
The Act also gives a lessee the ability to apply to the Court for relief in some circumstances, if the lessee:
1. believes the lessor has unreasonably withheld consent;
2. believes a condition attached to the consent is “unreasonable, unnecessary or onerous”; or
3. has not been given a decision notice within the time required.
This new procedure will allow lessees to have a reasonable understanding of when a decision will be made on a request. This lets them timetable the request and arrange their affairs more usefully.
However, the new remedies available for the lessee also help to ensure that complex arguments about breach of contract are not required, allowing the Court to simply consider the reasonableness or otherwise of an action taken or decision made by the landlord in all the circumstances.
No More Keeping Guarantors on the Hook Forever
Personal guarantees are a common form of security in commercial leases.
Generally this is reasonable if there is concern the lessee might not be able to meet its obligation. However, it can start to get a bit unreasonable if the lessee wants to assign the lease to somebody else.
What typically happens is that the landlord requires both the previous lessee and guarantor to remain liable for the lease if the new tenant or guarantor don’t live up their obligations.
And while this might still be within the realm of reasonable, what if the lease gets assigned again? Well, historically the landlord STILL gets to keep tenant A and guarantor A on the hook.
However, as from 1 August 2025 the liability ends after one degree of separation. It looks like this:
1. Tenant A and Guarantor A – liable during the term of Tenant A’s lease;
2. Lease gets assigned to Tenant B. Now, Tenant B, Guarantor B, Tenant A and Guarantor A can all be liable for breaches under the lease.
3. Lease gets assigned to Tenant C. Now, Tenant C, Guarantor C, Tenant B, Guarantor B can be held liable – but not Tenant A or Guarantor A.
Covenants Remain Enforceable
Leases often contain obligations and covenants that might not be directly connected with the land the subject of the lease.
The new Property Law Act clarifies that these obligations are still enforceable after an assignment or transfer.
The exceptions are if the covenant in question:
1. is expressed to be purely personal between the parties;
2. is expressly excluded from the assignment or transfer;
3. for assignments, it is agreed with the new lessee that the term remains with the current/old lessee;
4. for transfers, it is agreed with the new lessor that the term remains with the current/old lessor.
Protection for Lessees if Lessor Refuses to Renew or Sell
Sections 163 to 167 introduce some new(ish) provisions relating to a landlord’s decision not to renew a lease or agree to a sale.
Many commercial leases give lessees a type of option. The most common are options to:
1. renew the term of the lease; and
2. purchase the land the subject of the lease.
The lessee typically exercises these options by giving certain notice to the lessor at a time usually specified in the lease (e.g. 3 months prior to the expiry of the lease term, the lessee may give the lessor a notice of its exercise of an option to renew the term).
Commonly paired with these options is the landlord’s ability to refuse the exercise of the option if the lessee is in breach of the lease.
This can lead to some drama, however, if the alleged breach of the lease is inconsequential compared to the dramatic consequence of refusing to extend the lease term. For example, refusing an option to renew because the lessee was half a day late in their rent 9 months earlier is generally considered an over-reaction.
The new procedures seem mostly designed to put a process in place so that lessees have sufficient warning of the landlord’s intention not to allow an option to be exercised, and to seek relief from the Court if the lessee desires to do so. They are not there necessarily to stop unreasonable landlord decision making but just offer clear notice of and remedy for it.
The new procedure spells out that the lessor may only refuse to renew, or extend the term, or sell, if the lessor gives the lessee a notice in the approved form stating
1. That the lessor intends to refusal in question because of 1 or more breaches;
2. The details of the breach/es in question;
3. That the lessee or a “designated person” may apply to the Court for relief;
4. That such an application must be made within 1 month of the notice;
5. That the lessee should get independent legal advice.
The lessor must give this notice within 10 business days after the lessee gives notice of their intention to exercise the option (or within 10 business days after the breach if it occurs after such a notice is given).
If the lessee does not apply to the Court for relief within 1 month, the lessor may refuse the exercise of the option.
You might have noticed that a “designated person” can apply to the Court. This means a mortgagee or receiver of the lessee’s interest in the land, so in theory at least a bank can take steps to protect the lessee’s position if it is inclined to do so.
Lessor Require to Give Notices to More Interested Parties
In several places (like the section just above) the new PLA provides for more rights of relief in the hands of third parties related to the lessee, such as a mortgagee of the lease, a receiver, a sub-lessee.
The PLA now generally requires many notices that previously just went to the lessee to also be given to these “designated persons”, to ensure that interested third parties can take steps to protect themselves and their interests if required.
Notices, Procedures and More in the New PLA
If you’re in the business of leasing like we are, then pay attention to these upcoming changes.
The new procedures on critical decision making, renewals and notice requirements are going to significantly change the way that things have been done for many years in those areas.
The lesson here is that from 1 August 2025 you need to ensure that anything you do under a commercial lease is spot checked to ensure that you aren’t inadvertently missing a new compulsory procedure, as you might find your rights significantly affected if that happens.
Need help with your leasing? Give us a call!
Comments