A lease for a childcare centre is usually a long term commercial property lease between a landlord and tenant. It is important to familiarise yourself with the steps involved in finding and negotiating a lease for your childcare centre. This article will set out seven tips regarding your rights and obligations as a tenant, as well as how to safeguard your interests.

1. Ensure Your Needs Are Met

Whether your goal is to expand and grow your business or establish regular turnover, you should choose a location that will allow for this over the entire duration of the lease.

2. Choose a Longer Lease

Traditionally childcare centre leases have a longer life than regular leases, sometimes up to 10 or 15 years. It may, therefore, be a good idea to choose a longer lease as frequent relocation may be expensive. This is not just because of the infrastructure required but also because most of your customer base will be dependent on your location.

3. Research and Inspect

Like you would do for any other commercial or residential lease, you should make the necessary inquiries and do your research.

For example, you may want to compare it to other premises in the area. You should also always check that it is not subject to restrictions like work orders or prohibitions.

4. Be Aware of Any Outgoings

Outgoings are additional costs that the landowner passes onto the tenant. Your lease should document all outgoings. Usually, outgoings include:

  • taxes and fees such as council rates, water rates and body corporate levies;
  • maintenance and repair services; and
  • reasonable expenses incurred as a result of promoting the childcare centre.

A lease that requires that you pay for outgoings may also require the landowner to keep you updated with estimated costs and the actual expenditure. You should be aware of the outgoings you are responsible for before signing.

5. Fully Understand What You Are Signing

It is vital that you read through the entire lease document so that you have a solid understanding of what you are signing.

For example, understand what activity the lease allows you to engage in on the premises. You should also make sure that the lease will not restrict you from performing activities that are fundamental to your childcare business.

The terms of a commercial lease are also open to negotiation. Fully understanding the terms of your lease will allow you to see if there are any terms you would like to negotiate before you enter into the lease.

6. Fitting Out a Child Care Centre

Depending on what condition the premises are in, the centre may need some work before you can start operating. As mentioned before, you can negotiate the lease terms before signing. You should try to negotiate with the landlord early access to carry out these works or negotiate a rent-free period to carry out your fit-out works.

However, considering the unique nature of a business that cares for children, you will also need to meet additional requirements that could be costly. Meeting fire safety standards and installing appropriate security measures are among the prerequisites for running a safe and profitable childcare business. You should also inspect the condition and age of all existing structures such as the:

  • walls;
  • roofing;
  • guttering;
  • gardens; and
  • fences.

7. Know Your Rights as a Tenant

Like any other lease, you need to know your rights both before signing as well as during the lease.

For example, if you have to sell the business, you want to be clear on whether you can transfer the lease to a new tenant.

Key Takeaways

It is important that you are clear on your rights and obligations as a tenant before signing into a childcare lease. A failure to understand or properly negotiate your rights as a tenant could be fatal to your childcare business. Take into account the unique nature of your childcare business, what you need to succeed, and whether the lease agreement provides you with that. If you have any questions or if you need assistance negotiating your childcare lease, get in touch with LegalVision’s leasing lawyers on 1300 544 755 or fill out the form on this page.

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