NSW's Vape Crackdown Puts Commercial Landlords on Notice

New legislation gives landlords stronger termination rights while introducing significant penalties for knowingly allowing illegal tobacco and vaping sales.

Commercial property owners and managers across New South Wales are being urged to review their lease arrangements following legislative changes that significantly increase the consequences of illegal tobacco and vaping activity within commercial premises.

The reforms, which took effect from 1 July 2026, introduce a new offence for commercial landlords who knowingly allow their properties to be used for the sale of illicit tobacco or illegal vaping products, while also expanding landlords' powers to terminate leases where NSW Health has issued a closure order.

For commercial property managers, leasing agents and landlords, the changes represent another reminder that property ownership extends beyond collecting rent. Understanding how tenants operate and responding appropriately to suspected illegal activity has become increasingly important.

New criminal offence for commercial landlords

Under the new legislation, commercial landlords who knowingly permit premises to be used for the sale of illicit tobacco or illegal vaping products may face substantial penalties.

Those found guilty could receive:

• Fines of up to $165,000

• Up to 12 months imprisonment

• Or both penalties combined

While the legislation targets landlords who knowingly allow illegal activity to continue, it reinforces the need for owners and managing agents to act promptly if concerns arise about tenant conduct.

Greater powers to terminate leases

The reforms also broaden the circumstances in which landlords can end commercial tenancy agreements.

From 1 July, landlords are able to terminate both wholesale and retail leases where a property becomes subject to a NSW Health closure order.

Previously, these termination provisions applied more narrowly under the Retail Leases Act 1994. Under the updated framework, landlords must provide tenants with at least 28 days' notice before terminating an affected lease.

The expanded powers are designed to give property owners greater certainty where government enforcement action has effectively prevented a business from continuing to operate.

Increased enforcement across NSW

The legislative changes come amid an intensified crackdown on the illicit tobacco and vaping market across New South Wales.

According to information highlighted by the Real Estate Institute of NSW, more than 290 short-term closure orders have been issued across the state since November 2025 as NSW Health continues its enforcement campaign.

The growing number of closure orders means commercial landlords, property managers and leasing specialists are increasingly likely to encounter situations where the new legislation may apply.

What it means for the industry

For real estate professionals involved in commercial property management, the changes place greater emphasis on proactive risk management.

Regular property inspections, maintaining open communication with tenants, responding appropriately to complaints and seeking legal advice where illegal activity is suspected will become increasingly important in protecting landlords from potential liability.

Agents should also ensure commercial clients understand both the expanded termination rights available to them and the serious penalties associated with knowingly permitting unlawful tobacco or vaping sales.

As enforcement activity continues to increase across NSW, understanding these legislative changes will be essential for landlords, property managers and commercial leasing professionals seeking to minimise legal and financial risk.

Landlords who believe these legislative changes may affect their commercial property should seek independent legal advice regarding their specific circumstances.