What are the costs associated with a lease?

If you think that all you need to negotiate is your rent before you sign a lease then you may be in for a big surprise. COVID-19 has highlighted for many businesses that there is more than just the rent to consider when leasing commercial or retail premises.

Here are all of the costs you need to take into account before you enter into a lease:

1. Outgoings

These are expenses that the landlord pays for owning the premises and can include land and water rates, building insurance premiums, managing agents fees and more. Outgoings can be negotiated so it’s important to understand what types of outgoings are being charged as you will pay these amounts in addition to your monthly rent.

2. Security Deposit/Bank Guarantee

The security deposit or bank guarantee is an amount that is held by the landlord during the term of your lease and can be anywhere from 1 months’ rent to 6 months’ rent and is payable on the first day of your lease.

3. Insurance

You’ll be required to have public liability insurance and is most cases, plate glass insurance. Your insurance needs to be in place before you’ll be given access to the premises.

4. Legal Fees

In addition to your own legal fees for having a lawyer review and advise on your lease, in commercial leasing, the landlord may ask for their legal fees to be paid as well.

5. Fit-Out Costs

You may need to budget for internal fit-out costs and depending on the type of fit-out you may also need Council approval.

6. Redecoration

You should check whether you are required to redecorate the premises at the end of your lease. This may include repainting all internal surfaces, re-carpeting floors and removing any fit-out.

7. Make Good

Make good refers to “making good” the premises to the condition they were in at the beginning of your lease. If your removing fittings and fixtures, you’ll be required to patch and repair any damage that is caused by the removal.

If you’d like more information about any of the information contained in this article you can get in contact via email or contact Principal Lawyer, Emilia Cardillo on 0414 964 205.

Stay up to date with the latest developments by following Cardillo Commercial Lawyers on Facebook and Instagram.

The information contained in this article is general advice only and you should obtain legal advice specific advice to your circumstances.

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