The Property Law Act 2023 (Qld) (2023 Act) introduces several reforms including changes that will impact the landlord-tenant relationship.
Key points:
- From 1 August 2025, the 2023 Act replaces the longstanding Property Law Act 1974 (Qld) (1974 Act)
- Among several reforms, there are several important changes to the rights and obligations of parties to a lease
- Both landlords and tenants should review the changes and their impact on current and future lease arrangements
Implied Terms
Both the 1974 Act and the 2023 Act contain provisions implying certain standard terms in leases that will apply unless the parties to the lease agree otherwise in writing.
The 2023 Act centralises and consolidates these implied terms – now referred to as ‘standard terms’ – in Schedule 1 of the Act (these terms were scattered through the 1974 Act). Many outdated covenants (such as cultivation of property, installation of fencing and upkeep of fencing) have not been retained as standard terms.
These standard terms are implied in a lease granted on or after 1 August 2025 unless the parties exclude their operation.
Enforceability of covenants on assignment of lease
One of the major changes the 2023 Act introduces concerns the enforceability of lease terms on the transfer or assignment of the lease.
Under the 1974 Act, this question was largely governed by common law principles. The effect was that, on a transfer or assignment of a lease, a transferee or assignee (as applicable) was only liable for covenants that “touch and concern the land” (i.e. covenants that directly affect the nature, value, use, or enjoyment of the leased premises, either to benefit or burden the land itself – not merely the personal interests of the parties). This often led to confusion and disputes as to which covenants a transferee or assignee (as applicable) was liable for.
The 2023 Act clears up any confusion on this point by stating that all rights and obligations under a lease will be enforceable by an incoming transferee or assignee following the transfer or assignment, except in the following circumstances:
- the lease expressly provides that the lease term is personal;
- the lease expressly excludes the lease term from assignment or transfer;
- in the case of a transfer of the lease by the landlord, the outgoing landlord and the incoming landlord agree in writing that the benefit of the lease term remains with the outgoing landlord; or
- in the case of a tenant’s assignment of the lease, the outgoing and incoming tenant agree in writing that the benefit of the lease term remains with the outgoing tenant.
Liability of assignor on assignment of lease
Under the 1974 Act, if a tenant assigns its interest in a lease to an assignee (“the first assignee”), the tenant (and any guarantor under the lease) is not automatically released from its obligations under the lease. This position remains unchanged in the 2023 Act.
However, the new Act alters the position involving an assignment by the first assignee to a subsequent third party (“the second assignee”) by providing that the tenant is released from liability to the landlord if the second assignee breaches the lease. The operation of this provision cannot be excluded.
The effect of this change is that a landlord should carefully scrutinise any proposed assignee, given that the landlord will have less opportunity to pursue the original tenant for any liability following a second assignment of the lease (noting that the landlord will be required to act reasonably in consenting to any assignment of the lease).
Landlord must act reasonably on request for consent
Under the 1974 Act, there was no obligation for a landlord to act reasonably when granting its consent to a tenant’s request under the terms of the lease.
The 2023 Act changes this position. It provides that a landlord must act reasonably when considering an application for consent in relation to:
- a proposed assignment of the lease or any proposed arrangement to sublet part or share possession of the premises;
- changing the use of the premises permitted under the lease;
- granting a mortgage over the tenant’s interest in the lease; and
- making an alteration to, or carrying out any works in, the premises.
The landlord must also respond to a tenant’s request for consent (including providing the tenant with the conditions on which the landlord’s consent is granted, if any) within one month of receiving the request for consent (or such other period as agreed between the parties).
The operation of the relevant provisions in the 2023 Act cannot be excluded.
If the tenant considers that the landlord has unreasonably withheld its consent, or if the conditions attached to the landlord’s consent are unreasonably, unnecessary or onerous, the tenant may apply to the Court to decide the matter.
Refusal of exercise of the option to renew the lease or purchase land
A tenant’s ability to claim relief against a landlord for refusing the tenant’s exercise of its option to renew the lease or purchase land has been a longstanding feature of the 1974 Act. The 2023 Act expands its application.
Under the 2023 Act, where a tenant has issued a notice exercising an option under a lease (to either renew the term or acquire the land) but has:
- breached the lease;
- failed to satisfy a condition precedent to exercise the option (for example, by giving the exercise notice within the time period for giving the notice specified in the lease); or
- failed to give a compliant notice exercising the option;
the landlord must serve a breach notice before they are able to refuse the tenant’s exercise of its option.
The breach notice must be given to the tenant within 10 business days after the tenant gives notice of the exercise of the option, and include:
- sufficient details of the breach;
- stipulate that the tenant may apply to the Court for relief against the refusal; and,
- advise the tenant to obtain independent legal advice about the landlord’s refusal and its implications.
If a landlord serves a breach notice and refuses the tenant’s exercise of its option due to that breach, the tenant may apply to the Court for relief.
When assessing such an application, the Court may consider (among other things) the nature of the breach relied on by the landlord, the extent to which the landlord has been prejudiced by the breach, and the conduct of the parties before and after the breach notice.
For more information, please contact Sarah Roettgers, Matthew Butchard and Faye Winterflood.
