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4 Sep 18

Every Lease Is Different

After 30 years in the commercial and industrial property sector, there is one Golden Rule that has survived the test of time - it is that “Every Lease is Different.”

The agreements reached and formalised in a lease at one property, do not mean they will apply anywhere else - even with the same Landlord.

Tenants constantly ask why they are required to pay a fixed (or stepped) rental increase each year, when an adjacent tenant has no rental increases for 3 years. Simple answer? Every Lease is Different.

Most times, the variations in leases relate to rent reviews, payment of particular outgoings (insurances, owners corporation levies, etc) or length of lease term.

Landlords sometimes agree to include outgoings into a slightly increased rental to offset the cost. This can be agreed so that the tenant avoids irregular larger monthly payments, which can make it difficult to predict expenses from one month to the next.

Also, a higher rental can be offset by lower level reviews or even the waiving of reviews for a pre-determined period. So, tenants may agree to pay a slightly higher monthly amount and by having no reviews for 2-3 years, they are in a better position to more closely monitor their costs, overheads, etc.

Higher rentals may be agreed in exchange for rental-free time at the beginning of a lease. This can be important to a tenant who may have significant ingoing and set-up costs, such as a first time business operator, a restaurant or manufacturing company.

The liability for repairs can vary, as some fixtures and fittings within a property may not belong to the Landlord, but have been left on site by a previous tenant and the Landlord notifies the tenant that they can use them (eg, air conditioning) but the Landlord states up front that they do not accept any responsibility for the operation of the equipment and as part of the lease agreement, the tenant accepts that they will cover any ongoing servicing, maintenance, etc.

So, a well meaning friend or neighbour may suggest that “you shouldn’t be required to pay that!”, to which the first response is to check the terms and conditions of the lease that you negotiated, agreed to and have signed, and to remember that Every Lease is Different.

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