158Regulation-making power

158 Regulation-making power (1) The Executive may make regulations for this Act. (2) A regulation may provide that words used in a lease, or a mortgage for leased premises have a wider meaning than that set out in the lease or mortgage, and may prescribe the meaning. Section 1.1 (see s 54) 1.1 Market rent, of premises, is the amount that could reasonably be expected to be paid in rent for vacant possession of the premises on the open market if— (a) the premises were let by a willing but not anxious lessor to a willing but not anxious tenant; and (b) both parties acted knowledgeably and prudently; and (c) the use to which the premises may be put under the lease is taken into consideration; and (d) the amount is worked out in accordance with this schedule. 1.2 The valuer must take into account the following in relation to the premises: (a) the gross cost of occupancy; (b) market evidence about comparable premises, including the level of incentives or inducements to lease (if any) being offered in the marketplace for comparable premises; (c) the estimated gross occupancy costs that would be agreed, on valuation, between a willing lessor and a willing tenant in an arms length transaction, after proper marketing of the premises, if the parties acted knowledgeably, prudently and without compulsion; (d) any covenant or restriction on the use of the premises or any covenant on adjacent premises that run with the premises; (e) court precedents about valuation practice; (f) the proposed arrangements for rent review; Working out market rent Schedule 1 Section 1.3 (g) any building service or improvement offered by the lessor (other than a service or improvement that can be removed or withdrawn by an outgoing tenant or someone other than the people for whom market rent is being worked out); (h) the condition of the premises, as provided by the lessor; (i) particulars required to be disclosed in a disclosure statement that affect or potentially affect the rental value of premises, including particulars about a tenant’s obligations, costs or responsibilities; (j) the terms of the lease or proposed lease; (k) any other relevant market evidence. 1.3 The valuer must not take into account the following in relation to the premises: (a) a special interest or concern of the lessor or tenant; (b) the tenant’s goodwill; (c) the tenant’s fixtures and fittings; (d) an advantage or disadvantage arising from the current lease agreement. 1.4 Section 1.2 and section 1.3 do not limit the matters that the valuer may take into account in relation to the premises. 1.5 A party to the lease may, on the party’s own initiative, make a submission to the valuer within 14 days after the appointment of the valuer and, if the party makes a submission within that time, the valuer must consider the submission. 1.6 The valuer must, in writing, tell each party to the lease of the party’s right to make a submission in relation to the valuation. 1.7 A notice must require the parties to make their submissions within 14 days after the date of the notice and tell the parties that, if they do not make a submission in that time, a valuation may be made without their submission. Section 1.8 1.8 The valuer may proceed with a valuation of a lease even if a party to the lease does not make the requested submission. 1.9 The valuation must give detailed reasons for the valuation and must include particulars of the matters that the valuer took into consideration in working out the valuation. 1.10 The valuation must include particulars of any concession or inducement disclosed to the valuer. 1.11 For this schedule: gross cost of occupancy, for premises, means the rent for the premises, plus recoverable outgoings (other than promotional levies or advertising commitments required by the lease). (see s 4) Note 1 The Legislation Act contains definitions and other provisions relevant to this Act. Note 2 For example, the Legislation Act, dict, pt 1, defines the following terms: • exercise • GST • Magistrates Court • territory lease accounting period, for a lessor, means a financial year or other period included in a disclosure notice under section 31 (Form of disclosure statements) or otherwise agreed between the parties. bond means an amount paid or payable by a tenant as security for the performance of his or her obligations under a lease. certificate of occupancy—see the Building Act 2004, dictionary. change of use lease—see section 9. commencement day means 1 July 2002. commercial premises—see section 7. conduct, in relation to a lease or to negotiations for the entering into of a lease, means an act or omission in relation to the lease or negotiations. Examples of acts and omissions in relation to leases or negotiations 1 making a request or demand of a person in relation to the lease or negotiations 2 taking action to enforce the terms of the lease 3 an action or omission that causes a breach of the lease continuous occupation lease—see section 10. core trading hours, for a shopping centre, means the hours when retail premises in the shopping centre are generally required to be open for business, whether the requirement is imposed by or under the lease or by or under another agreement or arrangement between the lessor and tenant or is imposed in another way. demolition, in relation to premises, includes any repair, renovation or reconstruction of a building containing the premises that cannot be carried out practicably without vacant possession of the premises. disclosure statement means a disclosure statement under section 30. discretionary rent review clause means a provision in a lease that— (a) provides for rent to be set or changed in accordance with whichever of 2 or more methods of calculating the change would result in the highest rent; or (b) has the effect of reserving to a party to the lease a discretion as to which of 2 or more methods of calculating initial rent or a change to rent is to apply; or (c) has the effect of reserving to a party to the lease complete discretion as to the rate of rent to apply; or (d) has the effect of preventing, or giving a person the power to prevent, a decrease if the provision for determining initial rent or rent variations otherwise operates in a way that rent might decrease. dispute— (a) for this Act generally—means a dispute to which this Act applies under section 17; and (b) in relation to an application, for part 14 (Dispute resolution)— see section 143. entered into, for a lease—see section 5. excluded area—see section 11. extend, under an option, includes renew under the option. initial rent means the rent set at the beginning of a lease or renewal of a lease. key money means an amount paid by or on behalf of a tenant to, or at the direction of, a lessor, or any benefit given to, or at the direction of, a lessor, but does not include— (a) rent; or (b) a payment for the goodwill or other assets of a business genuinely operated by the lessor that is sold or to be sold by the lessor to the tenant; or (c) a bond or security deposit, or a guarantee by way of security; or (d) an amount payable on account of outgoings; or (e) a reasonable amount payable to someone for attendances on the tenant in relation to the preparation of documents that are relevant to a lease; or (f) any reasonable amount payable to a lessor for goods and services provided, or to be provided, to the tenant; or (g) an amount allowed to be paid under this Act. lease means a lease, within the meaning of section 12, to which this Act applies under that section. Note Pt 13 only applies to leases for premises in retail areas of shopping centres. lessor, of premises, means a person who grants a right to occupy the premises under a lease, and includes— (a) a sublessor; and (b) a person who receives the right to lease the premises by assignment from the lessor or by operation of law; and (c) in relation to negotiations for a lease—a prospective lessor. lettable area, of premises, means the area of the premises worked out in accordance with section 13 (How to work out the lettable area of premises). market rent, of premises—see schedule 1 (Working out market rent). normal purpose, of leased premises that have been damaged, means the way the premises were ordinarily used by the tenant before they were damaged if the use was allowed under the lease. option, for a lease, means a right given under the lease for— (a) the extension of the term of the lease; or (b) the renewal of the lease for a further term. party, to an application, for part 14 (Dispute resolution)—see section 143. premises, for a lease, are the premises covered by the lease. recoverable outgoings means outgoings recoverable under section 70. renewal, of a lease—see section 6. rent includes a component of rent. rent review includes a change to rent payable on the exercise of an option under a lease, but does not include a predetermined rent change. retail area means the area of a shopping centre other than an excluded area. retail premises—see section 7 (2). shopping centre—see section 8. small commercial premises means commercial premises with a lettable area of no more than 300m2. tenant, of premises, means a person who has the right to occupy the premises under a lease, and includes— (a) a subtenant; and (b) a person who receives the right to occupy the premises by assignment from the tenant or by operation of law; and (c) in relation to negotiations for a lease—a prospective tenant. termination notice means a notice under section 117 (Right to terminate—no disclosure statement etc) or section 118 (Failure to notify material change in disclosure statement). turnover includes gross takings, gross receipts and gross income. turnover rent means rent, or the part of rent, based on the tenant’s turnover. valuer means a person who is competent in retail and commercial market rental valuations. 1 About the endnotes 1 About the endnotes Amending and modifying laws are annotated in the legislation history and the amendment history. Current modifications are not included in the republished law but are set out in the endnotes. Not all editorial amendments made under the Legislation Act 2001, part 11.3 are annotated in the amendment history. Full details of any amendments can be obtained from the Parliamentary Counsel’s Office. Uncommenced amending laws are not included in the republished law. The details of these laws are underlined in the legislation history. Uncommenced expiries are underlined in the legislation history and amendment history. If all the provisions of the law have been renumbered, a table of renumbered provisions gives details of previous and current numbering. The endnotes also include a table of earlier republications.