Commercial property exists in all States and Territories of Australia. Commercial properties are used by businesses, organisations and other associations to conduct their business, commercial project, corporate affairs and activities. Unlike residential properties which house individuals, couples and families, commercial properties house business owners, employers, employees, contractors and volunteers.
Commercial properties are located throughout the various urban and regional areas of Australia because there is no one location to conduct business. Whether you operate an office, warehouse, production facility, manufacturing plant or other like facility or space, you will need to acquire or lease commercial property. Commercial properties differ in size, features and cost and it is important to check the lease terms to ensure the arrangement suits your needs and requirements.
Understand the difference between Leasing and renting
Often, the terms lease and rent are used interchangeably. However, there is an important and subtle difference. Before we explain the difference, it is important to ensure that when you are entering into an arrangement with an owner or landlord, make sure you check the agreement terms and conditions and have them reviewed by a qualified legal professional.
Renting refers to a tenant or occupier using space that is owned by a landlord or owner. Leasing refers to a landlord or owner making space available to a tenant or occupier. Both renting and leasing are terms used on either side of the same coin. In summary, a tenant rents commercial property that is being leased by a landlord. Although these terms are blended during conversation, it is important to be aware of this difference and check that the owner or landlord does have title to the commercial property and the rights to lease the commercial property to third parties.
- Renting Terms: The lease contract will contain terms and conditions. These terms and conditions must comply with the applicable laws, regulations and industry best practices in the relevant State or Territory in which the commercial property is situated. Terms and conditions include the period of stay, periodic rental amount, outgoings borne by the landlord, maintenance requirements and other important conditions.
- Contract renew terms: The rental agreement will usually have a term for a set number of years and/or months. Once the term expires, it is important to renew the contract and the period of the lease. This is to avoid being placed on a periodic lease. Some lease agreements have options to renew the term within a set number of days or months prior to the expiry of the term with written notice to the landlord.
- Rent free period and Rate abatement: These terms refer to a right that the tenant has to suspend rent in the event that the landlord needs to do something under the agreement. This right might be exercised by the tenant because the landlord needs to conduct repairs, perform maintenance or ensure that neighbouring tenants are not causing a nuisance.
- Additional fee: Lease agreements may include additional fees for a variety of reasons. It is important to check the terms of the agreement before signing and dating the lease. Additional fees may be incurred for late rental payments, not keeping the property in good repair or causing a nuisance to neighbouring properties.
- Know the owner: It is important for tenants to know the owner / landlord and to have a good relationship with them. A healthy relationship will make the lives of both parties simple and ensure that issues do not escalate when they can be resolved amicably. Also, by knowing the owner, you can maintain continuity of operations without having to be told to vacate at the end of the lease or for not complying with lease conditions.
- Maintenance Team: Most commercial property leases include a maintenance team that will be funded by the landlord. This team ensure that the commercial properties and common property are maintained in good repair. It is wise to check these terms; otherwise the tenant could bear the cost of maintenance and keeping any common property clean.
- Make good clause: These types of clauses can apply to both the landlord and the tenant, depending on how they are used. Make good clauses enable either party to demand the other party to do something in accordance with the lease conditions. For example, the landlord may require the tenant to fix any damage to the property or the tenant may require the landlord to perform maintenance at the property.
- Permitted Use Clause: The permitted use clause is a fundamental clause in a lease contract. It states the purpose for which the tenant must use the commercial property. A breach of this condition can be serious because it can trigger other regulatory action too. For example, using a commercial property for a restaurant must comply with the permitted seating numbers. Or, using a commercial property for manufacturing may prohibit the use of toxic chemicals. Tenants must take proper steps to comply with the prescribed conditions.
Commercial Property Leasing and Renting Experts
At Maspia Property, we have a team of commercial property renting and leasing experts. Our qualified and skilled team are familiar with the commercial property markets in Australia and can help both tenants and landlords engage with commercial property in accordance with their needs and requirements. We manage a diverse portfolio of commercial properties and are well-equipped to serve landlords and tenants with exceptional services. For more information, call the team on 0418 662 415.
NOTE: This is general advice only and should not be relied upon to make leasing, renting, or other property-related decisions. You should obtain specific advice, relevant to your specific circumstances from a suitably qualified professional.