Two recent cases namely Q St Kilda Tenancy Pty Ltd v Kane (Building and Property) [2023] VCAT 75 (24 January 2023) and Roberts Family Enterprises Pty Ltd v Meddles Bekirofski and Reshat Bekirofski (Building and Property) [2023] VCAT 121 (7 February 2023) at VCAT examined the issue of caps on rent reviews.
Section 35(3) of the Retail Leases Act 2003 states that rent reviews are void where they seek to prevent or limit the extent to which rent can be reduced.
There is no such provision however to limit or cap an increase in the rent payable upon review.
In these cases there was a cap on any increase in rent where VCAT found in favour of the tenants and relied upon section 35(2) of the Act wherein there can only be one basis of review. By extension and in accordance with section 35(7) the basis of review then reverted to a market review. Further details of the case can be found here:
https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VCAT/2023/75.html?context=1;query=%22building%20and%20property%20list%22;mask_path=au/cases/vic/VCAT
https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VCAT/2023/121.html?context=1;query=%22building%20and%20property%20list%22;mask_path=au/cases/vic/VCAT
If you wish to discuss this further, please contact our property management team.