PPSR update – good news for NSW small business


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The Personal Property Securities Amendment (PPS Leases) Bill 2017 (the Bill) was passed by Parliament on 20 May 2017. This Bill will significantly reduce the regulatory impact which the Personal Property Securities Act 2009 (PPSA) is having on short-term hire and rental businesses, the majority being SMEs. We outline some of the welcome relief for small to medium businesses.

Recap on the PPSA

The PPSA commenced on 30 January 2012 and is a national act that sets out the rules for security interests in personal property. Personal property is the description for all property other than real property (land and buildings). The PPSA established uniform rules for:

  • creating valid and enforceable security interests;
  • setting the priority between competing security interests;
  • when you can enforce a security interest after an insolvency event; and
  • circumstances where personal property is acquired free of a security interest.

What is a PPS Lease?

A lease or bailment of personal property will be a PPS Lease if the lease or bailment is:

  • for a term of more than one year;
  • for an indefinite term;
  • for a term of up to one year that is either automatically renewable or renewable at the option of one of the parties for one or more terms and the total of all of the terms might exceed one year; or
  • for a term of up to one year and the lessee/bailee, with the consent of the lessor/bailor, stays in possession of the goods for more than one year (i.e. only once the lessee/bailee has been in possession of the property for one year will the lease become a PPS Lease),


  • the lessor/bailor is not regularly engaged in the business of leasing/bailing goods;
  • it is a lease of consumer property which is part of a lease of land and the leased property is incidental to the use and enjoyment of the land;
  • it is excluded by regulation; or
  • in the case of bailments, the bailee does not provide value for the bailment.

PPS Leases have caused two main problems since the introduction of the PPSA, including:

  • understanding which transactions give rise to a PPS Lease and the need to register a financing statement (and the consequences of not doing so); and
  • placing an additional, unnecessary and sometimes expensive burden on lessors/bailors, many of whom are SMEs that enter into leases that have an indefinite term but are often less than one year.

The Bill's significance

The Bill amends the definition of PPS Lease in the PPSA by:

  • extending the term of a lease before it may qualify as a PPS Lease from one year to two years; and
  • providing that a lease or bailment for an indefinite term may only become a PPS Lease if the lessee/bailee remains in uninterrupted possession of the goods for at least two years with the consent of the lessor/bailor.

This Bill when passed will significantly reduce the regulatory impact which the PPSA was having on short-term hire and rental businesses, the majority of which are SMEs. The hire and rental sector almost exclusively uses indefinite term leases which usually run for less than a week and rarely exceed a period of two years.

An amended section of the PPSA will continue to capture longer term high value hire and rental industry leases.

How can we help?

Our team has several PPSA subject matter experts, and are well placed to review your PPSA policies and procedures, advising on their effectiveness or otherwise in the event you or one of your customers is experiencing an insolvency event. To ensure your security interests are not at risk, contact us for more information and a free initial discussion.

We can also undertake an independent assessment of your business to assist you to determine the company’s financial position and identify any risks to the business and potential liability for officers of SME companies.