Commercial Leases: Five Things Tenants Often Miss

Signing a commercial lease is a significant commitment — often for three to five years or more. Many business owners focus on the rent and the location, and overlook clauses that can have serious financial consequences. Here are five things we regularly see tenants miss.

1. Make-good obligations

Most commercial leases require you to return the premises to their original condition at the end of the lease. This can mean removing fit-out, repainting, repairing damage, and more. The cost can be substantial. Understanding your make-good obligations before you sign — and negotiating them where possible — can save you significantly at lease end.

2. Outgoings

In many commercial leases, the tenant pays a share of the building's outgoings — rates, insurance, maintenance, and management fees. These can add 20–30% on top of the base rent. Always ask for a schedule of estimated outgoings before signing.

3. Rent review mechanisms

Leases typically include annual rent reviews — either fixed percentage increases, CPI-linked increases, or market reviews. Market reviews can result in significant rent increases (or decreases). Understanding how and when rent will be reviewed is essential for financial planning.

4. Assignment and subletting restrictions

If you want to sell your business or sublet part of the premises, you will likely need the landlord's consent. Some leases impose conditions that make this difficult or expensive. If there is any chance you may want to exit the lease early, review these clauses carefully.

5. Personal guarantees

Landlords often require directors of a company tenant to provide a personal guarantee. This means if the company cannot pay rent, you are personally liable. The scope and duration of the guarantee should be negotiated before signing. At Djeric Legal, we review commercial leases and negotiate on your behalf. Contact us before you commit.