Reading time: 4 minutes

If you are the tenant of a commercial or retail lease, it is worth revisiting the key aspects from time to time to ensure that your lease is continuing to work in your favour. Below is a quick guide of things you should check periodically throughout the term of your lease to ensure it remains in good shape. It is worth doing so to ensure you are compliant and not paying extra money to your landlord.

Check Your Permitted Use is Still Relevant

The lease specifies permitted use and is the use which you, as the tenant, will put the property to. For example, if you tenancy initially started as a coffee shop, your lease may state that the permitted use is “Café”.  However, if you have added retail sales to your business as a combined café/ book and gift shop during your lease, it may be necessary to vary the permitted use to “Café and retail sales” to ensure your use of the premises is compliant.

It is critical that you do this and that the landlord consents to the change. If you do not comply with the permitted use (or vary it by agreement where it has changed) you may be in breach of your lease and trigger a termination clause.

Have Your Outgoings Been Passed on Correctly?

Some tenants pay outgoings (or operating costs of premises) on top of their monthly rental payments.  Examples of outgoings include land tax, rates, water usage, cleaning costs and the like. Most leases contain provisions as to statements of outgoings and procedures for any adjustments each year after the issuing of statements. Ensure you are familiar with these clauses and that the landlord has followed them. It is worthwhile to request copies of all invoices for outgoings and details of the way they have been calculated to check that you have been paying the correct amounts. Small errors over the course of a long-term lease can add up to quite a difference, particularly if you are paying the landlord more than you should be.

Note that there are additional disclosure requirements regarding outgoings for retail premises with which your landlord should comply.

What is the Rental Review Regime in Your Lease?

It is crucial that you are well versed in how your rent will increase during the term. Most leases have one of the following mechanisms inserted to deal with rental increases:

  1. Increase by Consumer Price Index (CPI);
  2. Increase by Fixed percentage (for example, 5%); or
  3. Review to market rent.

On the anniversary of the lease commencement date, commonly one of the above three mechanisms will apply to increase your rent incrementally. In practical terms, you should be aware of how and when your rent will increase. Once it does, check that it has been calculated and applied correctly to ensure that you are not paying more rent to the landlord than you are legally required to under your commercial or retail lease.

Have you Diarised Your Lease Option Dates?

Does your lease have an option (or options) for renewal? If so, it is necessary to note down the dates of:

  • The option (or options); and
  • The dates which you must exercise these.

You may lose your right to exercise the option if it’s not validly exercised, and find yourself and your business out on the street looking for new premises. Ensure you understand the option clauses and diarise the dates that you must exercise the option by.  Usually, this can be anywhere between three to nine months before the end of the lease’s term.

Once an option is exercised, the rent will be determined by way of market review – so ensure this is undertaken correctly. Leases should contain a detailed procedure for a review to market, including a dispute or “break” provision for the instruction of an expert valuer to determine the rental value with both parties to share the price of the valuer.

Also, ensure that there is not a “ratchet” provision in the lease which will prevent the rent falling below its current level upon any review to market.


If you are the tenant in a retail or commercial premises, it may be worthwhile submitting your lease for a “health check” by one of our commercial leasing lawyers. Questions? Get in touch on 1300 544 755.


Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards