Lease costs

This page has information about the costs associated with a business lease in the Northern Territory (NT). 

Bonds and rent

Bonds

Some leases may require you to lodge a security deposit, which should be held by solicitors or real estate agents in a trust account.

Rent

A landlord may require you to pay rent in advance. This is usually the amount payable for one rental period under the lease.

Calculating rent

There are several different ways to calculate the amount of rent payable.

Turnover rent

One way to determine the amount of rent to be paid under a lease is to decide on a percentage of the turnover of your business. This is known as turnover rent.

Current market rent

The current market rent is based on the rent that would reasonably be paid for a vacant shop on the open market.

If you disagree with the landlord’s assessment, the Commissioner of Business Tenancies can nominate a specialist retail valuer to determine the current market rent.

Index of price or wages

In this case the rent is tied to a formula that is based on the movement in the Consumer Price Index (CPI).

Fixed percentage of base rent

The base rent in a retail shop lease can be varied by any percentage negotiated and agreed to by the landlord and tenant.

Fixed annual amount

The base rent in a retail shop lease can be varied by any fixed amount as negotiated between the parties.

Rent reviews

The lease must specify when a rent review will be conducted and how it is to be done.

Other considerations

Outgoings

Under some leases, you may be required to contribute to the landlord’s outgoing expenses in addition to rent, as specified in the lease. 

Typical outgoing expenses include all of the following:

  • lighting
  • cleaning
  • air conditioning of common areas
  • centre management costs
  • rates, taxes and levies
  • insurance premiums.

Key money and goodwill

The Business Tenancies (Fair Dealings) Act prohibits a landlord from seeking or accepting any payment to secure the granting, renewing, extending or assigning of a lease.

Sinking funds

The landlord may require you to contribute to a sinking fund for maintenance and repairs to the premises.

Sinking funds are subject to strict auditing provisions.

Permitted use

The permitted use clause of a lease determines what type of business you can operate from the leased premises.

Promotion and advertising

A landlord cannot require you to undertake advertising or promotion of your business.

However, if the shop is in a shopping centre, you may be required to contribute separately to the promotion and advertising of the shopping centre in which the leased premises are located.

Other payments

Your landlord is able to require that you pay for any the following, if specified in the lease:

  • damages for breach of a term of a lease
  • an indemnity for loss or damage the landlord suffers as a result of your actions or omissions
  • interest on arrears of rent and outgoings
  • the landlord’s reasonable expenses incurred in investigating a proposed assignee
  • the landlord’s reasonable expenses of and incidental to an assignment of a retail shop lease and any consents to the assignment
  • amounts spent by the landlord in fitting out the leased shop
  • granting a franchise in relation to the granting of a retail shop lease
  • payment for plant, equipment, fixtures and fittings sold by the landlord in connection with the granting of the lease.

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Last updated: 13 October 2017