A contract for the hire of goods by a person for a specified time at a specified rental is treated by the NCC as a "consumer lease". However, the NCC does not apply to leases for a fixed period of four months or less [s 171].

From 12 June 2023, consumer leases for an indefinite period are also regulated. This includes where the lessor is a corporation, the lease is entered into in constitutional trade or commerce or the lease is entered into using postal, telegraphic, telephonic or other like services within the meaning of the Constitution [ NCC 171 (1A)]. There is a prohibition on any lessor entering into a consumer lease for an indefinite period unless they are a corporation [NCC s 179VC]. Nor can any lessor use postal or the like services to enter into any consumer lease unless they are a corporation [NCC s 179VB].

A lessee under a consumer lease for an indefinite period may at any time end the lease by returning the goods hired under the lease to the lessor during ordinary business hours or as otherwise agreed with the lessor [NCC s 179(1)].

Cap on fees and charges

From 12 June 2023, there is also a cap on the fees and charges for consumer leases. A lessor must not enter into or vary a consumer lease for an indefinite period so that the total amount payable for any month is no more than 1/48 of the permitted cap [s 175AA (2)]. A lessor also must not enter into or vary a consumer lease so that the total amount payable for the lease is more than the permitted cap, as follows [NCC s 175AA]:

The permitted cap for a consumer lease is the sum of the following amounts:

(a) the base price of the goods hired under the consumer lease;

(b) the amount worked out by multiplying the base price of the goods hired under the consumer lease by:

(i) in the case of a consumer lease for a fixed term—0.04 multiplied by the number of whole months of the consumer lease, up to a maximum of 48 months; or

(ii) in the case of a consumer lease for an indefinite period—1.92;

(c) the permitted delivery fee (if any) for the consumer lease;

(d) the permitted installation fees (if any) for the consumer lease;

(e) the permitted add‑on fees (if any) for the consumer lease.

Fees and charges payable in the event the lessee defaults on the lease and enforcement expenses within a set amount do not count against the cap [NCC s 175AA(4)]. It is a criminal offence for a lessor to impose fees and charges for a consumer lease that exceed the permitted cap [NCC s 175AB]. A lessee may recover any amount paid in excess as a debt against the lessor [NCC s 175AC].There is also a limit on the amount that may be recovered if a lessee is in default under a consumer lease [NCC s 179GA]. Any provision in excess is void and a lessee may recover any amount recovered in excess of the limit [s 179GA(2)].

Pursuant to section 172 of the NCC, the same presumptions and declarations as to the purpose for which a consumer lease is entered into apply as those in relation to other credit contracts. For more information, please refer to Preliminary requirements for NCC regulation.

Contents of consumer lease

Under section 174 of the NCC, a consumer lease must be in writing and disclose, at a minimum, the following:

From 12 June 2023, a consumer lease for household goods must also contain [NCC s 174(1A)]:

Copies of lease, other prescribed documents and statements

The lessee must get a copy of the lease within 14 days with an explanatory statement in the statutory form [NCCPA Regulations Form 17] which sets out a consumer’s rights relation to the lease [NCC s 175].

Lessors are also required to give lessees periodic statements of account (not more than 12 months apart) which must include prescribed information as provided in regulation 105A [NCC s 175D]:

Section 175H of the NCC provides that a lessor must provide an end of lease statement within 90 days before the end of a fixed term consumer lease, or within 7 days of the lessee requesting the statement in relation to a indefinite consumer lease, or the day it ends. Regulation 105C provides that the following information must be set out in the end of lease statement:

Under Part 3-4 of NCCPA (in particular, ss 151 - 155), a lessor under a consumer lease is required to comply with provisions that are largely equivalent to the responsible lending provisions imposed upon credit providers. This includes carrying out an assessment (which must be provided to a lessee upon request) as to the unsuitability of the lease, including taking into account the lessee’s objectives. For more information, please refer to Responsible lending obligations. The lessee has the same rights as a borrower to obtain a copy of the written assessment on request pursuant to section 132 of the NCCPA.

From 12 June 2023 additional responsible lending obligations have applied in relation to consumer leases for household goods.

Consumer leases for household goods

There is now a prohibition on credit providers making unsolicited communications to a consumer inducing them to enter into a consumer lease for household goods when they are in the physical presence of the lessor and in a public place that is not the business premises of the lessor [NCC s 179VA]. It is a criminal offence for a lessor engage in conduct contravening the prohibition. Further, a lessee who enters into a consumer lease for household goods within 30 days of an unsolicited communication, cannot be held liable to pay any amount that exceeds the base price of the goods under the consumer lease, and may recover any amount paid in excess as a debt against the lessor [NCC s 179VA(4)].

Lenders who represent that they enter into consumer leases for household goods with consumers must display information and give information in accordance with any determination made by the Australian Securities and Investment Commission [ss 147A and 156A]. This may include set information that must be displayed in certain places or at certain times in certain ways [NCCPA ss 147A(2) and 156A(2)].

The NCCPA [s 156B] and the NCCP Regulations [reg 28LCB] also prohibit consumer leases for household goods that do not meet income and repayment requirements. Any repayment or other amount due in a repayment period must now be less than or equal to 10 per cent of the consumer’s available income during the repayment period.

Lenders proposing to enter into a consumer lease for household goods must obtain and review information about each transaction on a prospective borrower’s bank statements, and the balances of the account for the previous 90 days, even if the borrower’s income is paid into a joint account [NCCPA s 140 (1A)].

Before entering into a consumer lease for household goods or representing that a consumer is eligible to enter a lease, a lender must document their preliminary assessment that a consumer lease for household goods is not unsuitable for a consumer, together with their inquiries and the verification of information [NCCPA s 156C].

The rules that apply to variation, reopening and enforcement of credit contracts apply, in general, to consumer leases. Under section 178 of the NCC, a lessee must be given 30 days notice of repossession except:

Section 179A of the NCC provides that a consumer is entitled to a written statement of the amount required to terminate a consumer lease, as well as certain other information, as long as the request by the consumer is in writing.

Finally, section 177F of the NCC extends to lessees under a consumer lease the right to apply to a Court to re-open transactions on the grounds of injustice. The wording of ss 177F – 177K of the NCC is largely similar to section 76 of the NCC, including the matters which the Court will take into account when looking at whether a lease contract is unjust.

Warning: Some traders, car dealers, finance brokers and lenders sign people up for consumer leases when in fact the consumer intended to enter into a loan contract. It is crucial that consumers check a finance contract before signing to see if the goods will be owned at the end of the agreement. If a lease is entered into in such circumstances advice should be obtained about having the transaction reopened as unjust.

A Novated Lease is not covered by the NCC, by virtue of section 171(2), which provides that it does not apply to goods hired by an employee in connection with their remuneration or other employee benefits.

A Novated lease is one under which an employee will lease (or more accurately, "hire purchase") a car from a seller, but the employer will be responsible for the lease repayments. The employer then deducts the repayments from the employee’s pre-tax income. Usually, a novated lease comes to an end when an employee ceases to work for the particular employer, in which case the employee is then liable for the lease payments. The lease may be assigned to another employer to tak over, but if the employee cannot find work, the car may have to be surrendered to the seller.

The lease may also come to an end when all payments are made, and the ownership of the vehicle then passes to the employee.