New Tobacco Laws in NSW: Key Considerations for Commercial Landlords

The Public Health (Tobacco) Act 2008 (NSW) has undergone significant amendments to address the challenges posed by illegal tobacco trading and the promotion of public health. Commercial landlords must be aware of the implications these laws hold for their property rights and responsibilities.

Key Provisions Affecting Commercial Landlords

Tobacco Closure Orders and Lease Termination Rights

Part 6A of the Public Health (Tobacco) Act 2008 introduces short-term (up to 90 days) and long-term (up to 12 months) closure orders for premises connected with illegal tobacco or vaping activities. Under section 50J of the Act, commercial landlords have a statutory right to terminate a lease if a closure order is in effect. A termination notice must provide at least 28 days’ written notice to the tenant, and the termination is deemed to occur due to the tenant’s repudiation of the lease.

In Hyper Star Market Pty Ltd v Mamacc Pty Ltd [2026] NSWSC 1027, the Supreme Court clarified that even when closure orders are varied to allow limited trading (excluding specific goods like tobacco or vaping products), the order remains “in effect,” thereby triggering the landlord’s termination rights under section 50J. This case demonstrates the enduring impact of closure orders on lease obligations and landlord remedies.

Prohibition on Tobacco Product Display
Section 9 of the Public Health (Tobacco) Act 2008 mandates that tobacco products, along with smoking accessories, must not be visible to the public within or outside the premises. Businesses violating this provision may incur significant penalties, with up to 100 penalty units for individuals and 500 penalty units for corporations. Landlords need to ensure tenants comply with such legal requirements, particularly where leases involve tobacco retailers.

Licensing and Compliance Requirements
Although there is no specific licencing regime for tobacco retail in NSW, retailers must notify the Secretary of their intent to operate. Multiple breaches of the Public Health (Tobacco) Act 2008 by a tenant may result in a statutory prohibition on selling tobacco at the premises for a defined period. Illegal tobacco or vaping activities may expose landlords to risks, including lost rental income or property closure, making due diligence before leasing crucial.

Critical Considerations for Landlords

1. Lease Clauses for Compliance with Laws: It is prudent for landlords to include explicit clauses in lease agreements requiring tenants to comply with all applicable laws, including those related to tobacco and vaping products. Such provisions not only protect landlords but also enhance enforcement mechanisms in case tenants engage in illegal activities. Without these clauses, landlords may face legal complexities in enforcing compliance or terminating the lease based on breaches.

2. Due Diligence on Tenants: Landlords must thoroughly screen prospective tenants engaging in tobacco or vaping-related businesses. Ensuring compliance with the Act and related regulations upfront can mitigate future issues.

3. Mitigating Risks from Closure Orders: Given the state’s strong regulatory framework targeting illegal tobacco activities, landlords should be vigilant about their tenants’ activities. Failure to act against unlawful use of premises can result in financial loss and potential liability under the Act.

4. Premises Use and Modifications: Landlords should be aware of other requirements under the Smoke-Free Environment Act 2000 (NSW) concerning smoke-free areas and the conditions for outdoor smoking zones in liquor-licensed premises (if applicable). Tenants should be educated on these obligations to avoid unintentional breaches.

Recommended Actions for Landlords

• Draft Robust Lease Agreements: Commercial leases should reflect compliance requirements for tobacco-related businesses, tailored to landlords’ rights under statutory closure orders.
• Monitor Tenant Activities: Regular inspections and collaboration with authorities can prevent unlawful usage of premises.
• Exercise Termination Rights Cautiously:  Where closure orders trigger statutory lease termination rights under section 50J, landlords should issue termination notices in a strategically lawful manner to avoid disputes based on procedural deficiencies Hyper Star Market Pty Ltd v Mamacc Pty Ltd atf Mamacc Property Unit Trust [2026] NSWSC 1027.

By understanding the regulatory emphasis on eliminating illegal tobacco trade and protecting public health, landlords can proactively manage risks while reinforcing compliance across leased commercial properties.

Solari & Stock’s Commercial Law team can assist landlords with preparing and reviewing commercial leases, advising on suspected unlawful use of leased premises and exercising termination and enforcement rights. Please contact our team if you require advice regarding your commercial property or leasing arrangements.

Contact Solari and Stock on 8525 2700 to speak with one of our Commercial Team today, or click here to request an appointment.

Article by Valentina Abouzeid
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