When you enter into a lease for a non-residential property in NSW, you do not enjoy the same protections as residential tenants in the state. When your lease on your shop, office, or warehouse ends, and you move out, you may face large and unexpected costs.
The requirements that determine the condition that a premises must be left in when you vacate, is called the “make good” provision in your lease. In most cases, you will be able to negotiate this at the start of the lease. Before you sign, you should make sure you know what you will be required to do when you leave. Also, it is wise to get a professional estimate of the costs involved.
Some make good provisions can be very punitive, and may require you to repaint, redecorate, and remove parts of the fit out that you thought were permanent.
In a recent matter that we were involved with, the tenant was shocked to learn that the make good provision in their lease would require them to remove tiles, change windows, and install new ceilings as well as repaint the whole premises. The cost of complying with the make good provisions in their lease was almost the same as a full year’s rent. But, at the end of the lease, it is too late t re-negotiate the terms.
So, before you sign a new lease, make sure you understand the make good provisions, and the implications. And, if you don’t, be sure to get some professional advice!