Leasing a commercial property

Entering into a lease

A lease is considered to have been entered into when one or more of the following have happened:

  • the lease is signed
  • the tenant takes possession of the leased shop
  • the tenant starts to pay rent under the lease

Lease preparation expenses

You may be expected to pay fees for any of the following services that are incurred during the preparation of the lease:

  • the negotiation, preparation and execution of the lease
  • obtaining consents from mortgagees or government agencies
  • any surveys or compliance with a requirement made by or under an Act

Also check the landlord’s disclosure statement for further charges, or the method of calculation.

Lease terms

The term of a retail shop lease including extensions or renewals must be at least five years.

If you want the total lease term to be less than five years, you must have written certification from a legal practitioner.

Exemptions

The Business Tenancies (Fair Dealings) Act does not apply to retail shop leases less than six months, where there is no right for the tenant to extend the lease, or to leases for 25 years or more.

Option to renew

An option to renew a lease gives the tenant the right to remain in the retail premises after the original or previous lease term expires.

For example, you may be offered a 3 x 3 x 3 lease. This means the first lease term is for three years, but you have the option to renew it for second and third three-year periods, for a total of nine years.

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Last updated: 13 October 2017