First Time Leasing Commercial Property?


Taking that first step with your business to lease commercial or industrial premises can be daunting if you haven't done it before. It doesn't have to be, however, here's a few things you need to know...
  • Most owners will require commercial tenants to pay some outgoings (e.g. water rates and usage, Council rates, land tax, insurance). Discuss this at the commencement of your negotiations to avoid any confusion.
  • Commercial leases generally include an annual rent review where the rent increases by a pre-determined amount or by reference to the Consumer Price Index.
  • Many commercial landlords are registered for GST purposes. This means that they are required to levy GST on rent received and you are required to pay GST on rent paid. This is typically shown in the rent for the property - the amount will either be expressed as "GST inclusive" or "plus GST" if GST is to be levied, "GST free" or "exclusive of GST" if it is not. If your business is registered for GST purposes you can generally claim an input tax credit on GST paid. Check with your accoutant or book keeper.
  • At the commencement of a new lease, owners will typically require the first month's rent to be paid upfront, regardless of the deal. In addition a security bond will be required and this can differ from owner to owner. A good rule of thumb is to budget for a security bond of one month's rent for each year of the lease (e.g. 2 year lease = 2 months' rent as a security bond etc).
  • Lease preparation costs should also be factored into your start up costs. Leases less than 3 years in length can be prepared by an agent at a reduced cost. Leases 3 years and over must be prepared by a solicitor and registered against the title of the property. Check with your solicitor about their costs for preparing a commercial lease.
  • Something many businesses do not consider is waste disposal. Council garbage collection services generally do not service commercial property so you will be required to arrange your own waste disposal service with a commercial provider. 
  • Commercial leases and retail leases are very different, depending upon the nature of your business and the type of property you wish to lease, there are some differences you will need to know about. Ask one of our agents to talk you through the process.
  • Unless you are leasing a property which has an existing DA in place for the same use you intend to carry on at the property, you will need to make enquiries with the relevant Council to determine whether a DA is required. We recommend this be done in any event to provide some certainty that you can use the premises once the lease commences. A good guide is to check what the current zoning allows. You can contact Penrith Council's planning department on (02) 4732 7777 for more information.
  • Most owners will consider approving modifications to their properties to suit your business requirements. Speak to an agent at the outset and be clear about any works you wish to carry out to the property so that clear and early approval can be sought from the owner. Depending upon the modifications, commercial lessors generally require you to reinstate the property to its pre-modification state at the end of the lease.
  • All commercial lessors will require you to take out and maintain an appropriate public liability insurance policy in relation to the premises. You will need to provide a copy of the certificate of currency at the commencement of the lease and then each time you renew your insurance.

If you have any questions at all, contact one of our friendly, knowledgable commercial agents on (02) 4731 2899 and put your mind at ease.