A commercial lease is one of the largest financial commitments an Australian small business will ever sign. A typical 5-year retail lease at $3,500/month is a $210,000 obligation — before outgoings, options, and rent reviews. The lease document itself is usually 40–80 pages of landlord-favourable drafting, and most tenants sign it with little more than a quick read-through.
Before you put your name to it, the contract review needs to surface the clauses that decide whether this lease helps your business or quietly destroys it.
The clauses that matter most
- Rent and rent reviews. Fixed annual increases (typically 3–4%), CPI-linked, or market reviews? A market review every 5 years can produce a 30%+ jump in one hit if you’re locked in.
- Outgoings. Council rates, water, land tax, insurance, body corporate fees, management fees. In a poorly drafted lease these can add 20–40% on top of base rent. Land tax is now passable to retail tenants in some states but not others — check Retail Leases Act applicability.
- Permitted use. Narrowly drafted use clauses (e.g. “cafe selling coffee and pastries”) prevent you from pivoting your business model without landlord consent.
- Make-good clause. The cost of returning the premises to original condition at end of lease can run $20,000–$100,000 for retail fitouts. “Strip back to base building” obligations are common and brutal.
- Personal guarantee. If you sign as a director-guarantor, the landlord can pursue your personal assets if the company defaults. Cap the guarantee, or push for a bank guarantee instead.
- Assignment and subletting. Can you transfer the lease if you sell the business? Landlord consent “not to be unreasonably withheld” is standard — but the lease often layers conditions that effectively block any transfer.
- Options to renew. A 5+5+5 lease structure looks attractive but options often require strict notice timing — miss the window by a week and the option lapses.
- Demolition and relocation clauses. Common in shopping centres. A landlord can terminate with 6–12 months’ notice for “redevelopment” — your fitout investment is gone.
Common red flags
- No Disclosure Statement for a retail lease. The Retail Leases Act in your state requires a Disclosure Statement at least 7 days before signing — without it, the lease may be voidable.
- Backdated commencement to push you into the next rent review.
- “Tenant must operate during all centre trading hours” in shopping centre leases — locks you into late nights and Sundays even if it’s not viable.
- Excessive interest on late rent (often 15%+ per annum).
- Indemnities for “any loss” — uncapped liability for landlord losses including consequential damages.
What Claim Done’s contract review delivers
Upload the lease. The AI returns a 15-minute, plain-English A4 PDF that flags the clauses above plus anything unusual, identifies what’s negotiable, suggests specific redrafts, and ranks risks by dollar exposure. Flat $79, available 24/7. You walk into the negotiation with a written list of every issue.
When to take it to a lawyer
For leases over $500,000 total commitment, anchor-tenant leases, leases with complex incentives or fitout contributions, ground leases, or anything in a regulated retail centre with a complex Disclosure Statement — get a commercial property lawyer involved. The Claim Done review still saves you their hourly rate by surfacing the issues before the meter starts running.
State-by-state Retail Leases Acts
Each Australian state has its own Retail Leases Act with mandatory protections that override conflicting lease terms. NSW has the Retail Leases Act 1994, VIC the Retail Leases Act 2003, QLD the Retail Shop Leases Act 1994, WA the Commercial Tenancy (Retail Shops) Agreements Act 1985, SA the Retail and Commercial Leases Act 1995, ACT the Leases (Commercial and Retail) Act 2001, NT the Business Tenancies (Fair Dealings) Act, and TAS the Fair Trading (Code of Practice for Retail Tenancies) Regulations. The threshold for which leases are caught varies by state — typically retail premises under a floor area or rent ceiling. Knowing whether your lease falls within the Act decides whether the landlord can charge for land tax, whether the Disclosure Statement was mandatory, and whether the tribunal (rather than court) is the forum for any future dispute.