Essential Services Measures Advisory Opionion

Essential Services Measures Advisory OpionionOn 1 May, VCAT handed down an Advisory Opinion in relation to costs associated with the maintenance of essential service measures (ESMs).Importantly, the Advisory Opinion states that landlords cannot require tenants to pay the repair and maintenance costs associated with the Building Act 1993 (Vic) and the Retail Leases Act 2003 (Vic).Landlords and tenants can agree outside of a lease for a tenant to undertake compliance with ESM provisions under the Building Act, but this will be done at the landlord’s expense. Costs incurred by a landlord in complying with Section 52 (2) of the Retail Leases Act also cannot be recovered from the tenant.　The Property Council is concerned by the unintended net costs to landlords affected by the interpretation of the Advisory Opinion. Whilst essential safety measures can be most efficiently carried out by landowners, we believe the costs of ESM maintenance should be recovered through the outgoings of the lease agreement.The Property Council, through its Victorian Retail Committee and Corporate and Commercial Real Estate Committee will advocate our recommendations on behalf of the membership to resolve practical implementation problems which may arise from the Advisory Opinion