Main Issues to Consider In a Commercial Lease in Australia

If you are thinking of setting up a business, then either you have your eye set on a property or are scouring the market for the suitable commercial setup. If you don’t have the finances to buy the property at once, then you must surely be looking through different leasing options on offer. Commercial leasing in Australia for small businesses is quite common, and that is why there are many options available to accommodate the needs of different businesses in the segment.

While commercial leasing is a good option for anyone trying to setup a new business, there are also some important issues and regulations linked with the process. If you want to make sure that there are no legal irregularities, then you need to pay close attention to meeting all the requirements without error.

Some of the important issues related to commercial leasing for small businesses in Australia, include the following,

Rights as a Tenant

The lease details all your rights and related obligations as a tenant. If you want to make any changes or add any adjoining space to the property, then make sure that you have the right to do it, under the negotiation terms made with your landlord. Some important rights as a tenant that you would probably want to include in your lease documents include,

  • Use of any common area
  • Access to all areas of the premises
  • Use of certain facilities like toilets
  • Putting up additional shelving and partitioning
  • Putting up any sign on the property

It is important that you discuss all the details before signing a lease contract.

Issue of Permitted Use of Property

Some lease terms often limit the use of a property for certain activities. It is important that you carefully check to know what type of business activities, the landlord will and will not allow on the premises.  Make sure that the clause for permitted use does not present any obstacles to the evolution and growth of your business.

Clause for Tenancy Mix

When you set up a business, you should surely keep an eye out for competition in the neighbourhood. Make sure that the landlord does not change the tenancy mix so that it has a direct impact on your business sales.

You can include an exclusivity of trade clause in the lease contract, which will restrict any direct competition and also help you to conduct any type of business you want on the premises.

Issues of Anchor Tenants

If your business depends on foot traffic which is generated by customers visiting another tenant like a supermarket, you can add a clause for anchor tenant. The clause outlines that you have the right to either terminate or qualify for a rent reduction in the event of the anchor tenant leaving the premises, or if there is any reduction in the total number of building tenancies.

Fit Out and Fixtures Clause

It is important that you are given a detailed condition report of the property, so that you know the actual condition of the premises and fixtures, before you sign up for a lease. Discuss who will be responsible for the fixtures and fit outs on your property.  If the landlord is responsible, then make them perform their due obligations. If you plan to make many any fit outs on the premises, make sure that you have the right to remove them once the lease ends.

Make sure that your commercial lease document includes all basic and relevant clauses which will make your tenancy an easy one.

More resources
Commercial Leases – Main issues to consider
Obligations On Rental Leases

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