Commercial Lease Agreements: What Tenants & Landlords Need to Know

Entering a commercial lease is a significant decision for both tenants and landlords. Understanding the key elements of your lease agreement can protect your investment and ensure smooth operations. Follow these five steps to get it right. 

1. Understanding Lease Types

Commercial leases in Australia typically include:

• Gross Lease: Landlord pays most outgoings.
• Net Lease: Tenant reimburses outgoings (rates, insurance).
• Percentage Lease: Rent linked to tenant’s turnover.

2. Key Clauses to Negotiate

• Lease Term & Options: Initial term plus renewal options.
• Rent Structure: Fixed, CPI-indexed or turnover-based reviews.
• Outgoings & Charges: Clear allocation for rates, insurance, maintenance.
• Fit-out & Alterations: Tenant improvements and make-good obligations.
• Assignment & Subletting: Conditions for transfer or sublease.

3. Rent Reviews & Outgoings

Most leases include periodic rent reviews—understand the review mechanism (market rent vs. CPI) and how outgoings are calculated and recovered to avoid unexpected costs.

4. End of Lease & Surrender

Review your termination rights, required notice periods, and any reinstatement or make-good obligations when the lease expires or is surrendered early.

5. Legal & Tax Considerations

Consider stamp duty, GST implications, and compliance if leasing through a trust or SMSF. Seek specialist advice to optimise tax outcomes and avoid pitfalls.

Need Professional Lease Advice?

Contact LawWise Australia for tailored commercial lease negotiation and drafting services.

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