Navigating the complexities of commercial leases is a critical task for any business owner in Australia. A commercial lease agreement outlines the legal and financial relationship between a landlord (lessor) and a tenant (lessee), governing the use of a property for business purposes. Given the long-term financial commitment and operational implications, it’s essential to approach these agreements with caution and diligence. Here’s an overview of the basics of commercial leases, highlighting why it’s crucial for clients to thoroughly read and understand these documents.

1. Types of Commercial Leases

  • Types of Commercial Leases: In Australia, commercial leases can vary significantly depending on the property type (e.g., office, retail, industrial) and the specific terms negotiated. Common types include:
  • Retail Leases: Governed by specific state and territory legislation, these often include additional protections for tenants.
  • Net Leases: Where the tenant is responsible for rent plus some or all of the property expenses, such as insurance, maintenance, and taxes.
  • Gross Leases: The tenant pays a flat rent, and the landlord covers all or most of the property expenses.

2. Key Lease Terms to Understand

  • Key Lease Terms to Understand:
  • Lease Duration and Renewal Options: Commercial leases typically run for several years. Understanding the lease term, options for renewal, and conditions for termination is crucial.
  • Rent and Rent Reviews: Be clear on the initial rent, how often it’s reviewed, and the method used for calculation (e.g., fixed percentage, CPI increases, market review).
  • Outgoings: Determine which party is responsible for expenses such as council rates, insurance, repairs, and maintenance.
  • Security Deposit/Bank Guarantee: Understand the amount required, conditions for withholding, and terms for return.

3. Important Considerations

  • Important Considerations:
  • Make Good Clauses: These clauses require the tenant to return the property to its original condition at the end of the lease, which can be a significant expense.
  • Subletting and Assignment: If your business needs change, you may wish to sublet part of the space or assign the lease to another business. Check the lease for any restrictions.
  • Fit-Outs and Modifications: Clarify who is responsible for the cost of fit-outs and whether you need the landlord’s approval for modifications.

4. Why Reading Your Lease Carefully is Crucial

  • Why Reading Your Lease Carefully is Crucial:
  • Long-term Financial Commitment: Commercial leases lock you into a financial commitment for an extended period. Understanding all terms and conditions is essential to avoid unexpected costs.
  • Operational Flexibility: The lease terms can significantly impact your business operations, including your ability to expand, renovate, or even sell your business.
  • Legal Obligations: Commercial leases are legally binding contracts. Failure to comply with the terms can result in legal disputes, financial penalties, or eviction.

5. How an Accountant Can Help

  • How an Accountant Can Help:
  • Reviewing Financial Terms: An accountant can help assess the lease’s financial implications, including rent reviews, outgoings, and the impact on your business’s cash flow and financial planning.
  • Tax Considerations: Understanding the tax implications of your lease, including deductions for lease payments, fit-outs, and other expenses, can significantly affect your net cost.
  • Negotiation Support: With their understanding of financial terms and business implications, accountants can provide valuable support during lease negotiations.


Commercial leases are complex documents with significant implications for your business. Thoroughly reading and understanding your lease, with the support of professional advice, is essential to navigate these complexities successfully. By doing so, you can ensure that your commercial lease supports your business’s operational needs and financial health, both now and in the future. Approaching commercial leases with a detailed and cautious mindset will protect your interests and ensure that your business is positioned for success in its physical location. Remember, the terms you agree to will affect your business for the duration of the lease, making it imperative to understand every aspect before signing.