New Criminal Offence for NSW Commercial Landlords — What It Means If You’re Buying, Selling, or Leasing Retail Premises

If you own, or are about to buy, commercial or retail premises in NSW, there’s a new law worth knowing about — because for the first time, a landlord can face criminal liability, including potential imprisonment, over what a tenant is doing on the premises.

What’s changed

The Public Health (Tobacco) Amendment (Landlord Offences) Act 2026 inserts a new section 11A into the Public Health (Tobacco) Act 2008. It creates an offence for a commercial lessor who knowingly permits premises to be used to sell illicit tobacco or illegal vapes. The maximum penalty is 1,500 penalty units — around $165,000 — and/or 12 months’ imprisonment, with a “reasonable excuse” defence available for landlords who can show they took appropriate steps. The reforms also expand landlords’ ability to terminate a lease where a closure order has been issued over the premises, extending beyond what the Retail Leases Act 1994 already allowed.

According to an industry legal update from the Shopping Centre Council of Australia, these changes commenced on 1 July 2026. It’s worth flagging that this specific date comes from an industry advisory rather than an official Gazette proclamation notice we’ve been able to independently verify, so treat the exact commencement date with a small amount of caution — though it’s consistent with the Bill’s progress through Parliament earlier in the year, and the practical effect for landlords is the same either way: this is now, or is about to be, in force.

Why “knowingly” is the key word

This isn’t a strict liability offence that catches landlords who genuinely had no idea what was happening on their premises. The offence targets landlords who are aware — or who have been notified, for example via a closure order — that illicit tobacco or vaping sales are occurring, and who fail to act by reporting it or moving to terminate the tenancy. A landlord who takes reasonable steps once they become aware has a defence available to them.

Why this matters for conveyancing, not just leasing

This isn’t purely a leasing issue for existing landlords — it has real implications for anyone buying or selling retail or commercial premises with an existing tenant already in place:

• Buyers of tenanted commercial or retail property should now factor “what is this tenant actually selling” into their due diligence, particularly for convenience stores, tobacconists, vape retailers, and similar tenancies. Inheriting a problem tenant now carries genuine criminal exposure, not just a commercial headache down the track.

• Vendors and landlords should understand the new lease termination powers available if a closure order is issued, and factor this into how leases are drafted or renewed going forward.

• Anyone advising on commercial leases should be aware that “we didn’t know” is a weaker defence than it used to be once a landlord has received any form of notice — silence after notification is now the risky path, not a safe one.

What to check before you sign

If you’re in the process of buying a commercial or retail property with sitting tenants, it’s worth asking directly what those tenants sell, and whether there’s any history of compliance issues at the site. This is a small addition to standard due diligence, but given the criminal exposure now attached to getting it wrong, it’s not one to skip.

The takeaway

If you’re buying, selling, or leasing commercial or retail property in NSW, this new offence is a fresh risk factor to raise — particularly for premises with tobacco, vape, or convenience retail tenants. Our New South Wales commercial conveyancing team services can build this check into your due diligence alongside the rest of your purchase or sale, so nothing gets missed.