Buying a commercial retail property in NSW in 2026 now requires a much higher level of due diligence than many investors may be used to. A retail shop with an existing tenant, regular rent and a signed lease can appear to be a straightforward investment. However, if that tenant is involved in illicit tobacco, illegal vaping products or unlicensed tobacco sales, the issue can quickly shift from tenant misconduct to landlord exposure.
This has become increasingly important because NSW Health now has significant closure order powers. Since 3 November 2025, NSW Health has been able to issue short-term closure orders for up to 90 days, while the Local Court can impose long-term closure orders for up to 12 months where premises are linked to illicit tobacco, illegal vaping products or unlicensed tobacco retailing. During a closure period, products cannot be sold and access to the premises may be restricted unless an exemption applies. For commercial landlords, that can mean a tenant unable to trade, rent payments stopping and a property suddenly becoming less attractive to lenders, buyers or replacement tenants.
Recent enforcement activity shows this is far from theoretical. During Operation TEMPEST26 across NSW and the ACT, authorities reportedly seized almost 3 million illicit cigarettes, more than 184 kilograms of loose-leaf tobacco and over 98,500 vaping devices. Authorities also reported multiple closure orders, several persons of interest and millions in alleged unpaid duties.
NSW Health also maintains a public register of premises subject to closure orders under the Public Health (Tobacco) Act 2008. However, buyers should not rely solely on a single search early in the transaction. NSW Health notes that the register is updated weekly and may not reflect real-time activity or expired orders. A prudent purchaser should therefore review compliance risks both before exchange and again close to settlement.
Landlords themselves may also face personal exposure. NSW has introduced offences targeting landlords who knowingly allow premises to be used for illicit tobacco or illegal vape sales without taking reasonable action, such as reporting the activity or attempting to terminate the tenancy. Penalties can include substantial fines and even imprisonment.
This does not mean landlords are automatically responsible for every unlawful act committed by a tenant. However, it does mean landlords can no longer adopt a passive “collect the rent and ignore the rest” approach where warning signs exist. Repeated complaints, suspicious trading patterns, blocked windows, excessive cash transactions, missing licences or previous inspections should all trigger immediate attention.
One of the biggest conveyancing risks is that standard commercial purchase checks may not reveal the entire issue. A lease may appear compliant, rent may be current and the business may still be operating normally during inspections. However, underlying compliance concerns, pending enforcement action or licensing issues may not be immediately obvious. For that reason, commercial due diligence should now extend beyond title searches, zoning checks and rent reviews where the tenant sells tobacco, vaping or smoking-related products.
A careful purchaser should request written disclosure from the vendor regarding any NSW Health investigations, police involvement, council action or regulatory notices affecting the premises or tenant. The lease should also be reviewed carefully for illegal use provisions, termination rights, indemnities and protections relating to closure orders or regulatory action. In some matters, buyers may require special contract conditions allowing settlement to be delayed or rescinded if enforcement action occurs before completion.
Flash Conveyancing Advice
Do not assume a sitting tenant automatically means secure income. If the business involves tobacco, vaping or smoking products, verify licences, review compliance history and make sure the lease gives the landlord practical protection if regulatory action occurs. A commercial property can quickly become an expensive problem if the doors are closed shortly after settlement.
Commercial property in 2026 is no longer just about location and rental yield. Tenant compliance, regulatory exposure and operational risk now matter just as much. Julian & Renee at Flash Conveyancing help clients look beyond the surface of a deal, because a lease that looks profitable on paper can quickly become a liability if the wrong issues are missed. Across NSW, from Blacktown and Parramatta to Kellyville, Rouse Hill and Schofields, their focus is simple: identify the risks early, protect the client properly and make sure the investment still makes sense once the fine print is fully understood.