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If you're looking to obtain business premises, there are many things that you need to know to strengthen your negotiating position. Landlords are like any business - they're in it to make money, so you can't expect them to do you any favours when talking about your commercial lease. You must enter a commercial lease agreement unless you own your business property. Here we give you a brief overview of how you should approach the negotiation to get the best possible deal for your business.

What Is a Commercial Lease?

Essentially, a commercial lease is a document between the landlord (a.k.a the Lessor) and the tenant (a.k.a the Lessee) that details the rights and obligations of each party. Under the umbrella term, different types apply in other circumstances.

They are:

  • Standard commercial lease - for non-retail enterprises
  • Retail lease
  • Licences - for short-term property occupation
  • Assignments & Subleases - for tenants to sublease

Depending on the nature of your business, you'll choose the most applicable, and each Australian state will have its legislation covering each one. So, you must adhere to the specific rules in your state, particularly as it will determine how the lease is made up and what needs to be done before the lease is officially entered into.

Your Right to Negotiate

The amount of wiggle room in your commercial lease negotiation will depend on how highly sought-after the property is and the prevailing market conditions. However, there is usually some room for manoeuvre, so you should aim for at least some of the following:

  • An initial rent-free period - if the property market is a little flat, your landlord may be anxious to get occupants in to avoid needing to pay business rates, which may allow you to request an initial rent-free period. This is ideal for new companies, giving them more time to reach a profitable state.
  • Try & Include a Break Clause - another element you could ask to include might be a break clause that allows you to exit your commercial lease agreement early. Rather than being committed to saying a 5-year lease, you might be able to request the flexibility of being able to end the arrangement on each anniversary with an agreed notice period. 
  • Repair & maintenance obligations - then there's something else that can save you a lot of money in the long run - your maintenance and repair responsibilities. You could perhaps request that you're only responsible for the building's interior or if that's not possible, you could ask for a Schedule of conditions to limit your exposure or for works to be carried out before your commercial lease begins.

Practical, Affordable Online Training for Business Success

As you can see, understanding what you're doing from minute one can help you save a lot of money throughout your lease, and it can have a significant bearing on the success of your venture. The great news is that you can learn everything you need to know with a cost-effective training course with OCA. Our Commercial and Retail Leasing Certificate covers everything you need to know about commercial lease agreements and the art of negotiation. With everything being delivered online, it offers the flexibility of learning when you have the time to. What's more, the CPD-accredited course content has been created with the help of industry leaders, and dedicated support is on offer seven days a week!

If you'd like to know more about this or our full range of courses across various sectors, visit us at Alternatively, if you want to speak to us directly before enrolment, call us on 1300 611 404, and we'll do everything we can to help.

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