Entering into a new retail lease is a big step, particularly during COVID-19. There are a number of things to think about:

1. Is it a retail lease or a commercial lease? As a tenant, you have much better protection under a retail lease rather than a commercial lease. This is an important difference, and you should seek legal advice before entering into the lease to ensure that your business is correctly categorised, rather than having to deal with the issue later.
2. An agent is not allowed to show you a property without a lessor’s disclosure statement and draft lease available for you to view. If you are interested in the property, you should ask the agent for copies of these documents before you make an offer. Agents are not required to have these documents for commercial lease properties, only retail lease properties.
3. If this is your first lease, make sure you have considered not only your initial rent, but the amount by which your rent will increase each year. You should also check whether GST is payable on top of the rental amount.
4. Check whether outgoings are included in the rent. If you are paying them separately, they should be listed in the lessor’s disclosure statement from the agent.
5. Do you know exactly what you’re leasing? Are there any car spaces included in the lease, or will you have to arrange your own parking? Is there a separate storage area included in the lease?
6. What facilities are included? Do you have to pay separately for services like cleaning? Will the landlord arrange for waste disposal, or is that your responsibility?
7. Landlords generally require some security by way of a bank guarantee or cash security deposit. If the tenant is a company, they will often also request that the directors of the company personally guarantee performance of the tenant’s obligations under the lease.
8. Check whether the landlord is offering any incentives to enter into a lease. This may be something like a rent-free period for you to complete your fitout, or a financial contribution towards your fitout.
9. At the end of the lease, you will generally have to “make good” the premises. The extent of these obligations will be set out in the lease, and you should ensure that these requirements are not onerous before you sign the lease.
10. If you do not meet your obligations under the lease, the landlord will have rights against you. You should ensure you are fully aware of what might happen if you are unable to pay rent for any reason.

Your rights and obligations are set out in the lease and in the Retail Leases Act (NSW) 1994, as well as any applicable regulations. Generally, the legislation will override the terms of the lease. You should ensure you receive detailed advice, and negotiate the terms of your lease, before you sign anything at all.

If you’d like some assistance reviewing your lease, feel free to contact us for advice.

Please note, information above is general only and is not legal advice.