New South Wales Commercial Lease Guide (Australia)

Commercial Lease Guide for New South Wales

A practical, tenant-focused guide to NSW commercial leases — not legal advice.

Last reviewed: May 26, 2026 by the BizLeaseCheck Editorial Team

Not legal advice. Use this as a checklist and discuss with a qualified Australian professional.

What to know before you sign

New South Wales retail leases are governed by the Retail Leases Act 1994 (NSW), which imposes a 5-year minimum term under section 16 (unless the tenant signs a lawyer’s certificate waiving it) and requires a Disclosure Statement at least 7 days before signing.

NSW also bans landlords from recovering land tax from retail tenants — a quiet but expensive protection that landlords sometimes try to engineer around. Office and industrial leases in NSW sit outside the RLA and have far fewer statutory protections.

Major markets

Where commercial activity concentrates.

Sydney CBD
North Sydney
Parramatta
Macquarie Park
Newcastle
Wollongong

Common lease types

Typical structures and what to watch.

Retail lease under the Retail Leases Act 1994 (NSW) — disclosure + 5-year minimum
Office lease (RLA does not apply — fewer protections; CPI or fixed rent reviews common)
Industrial / logistics lease (typically net + outgoings, 5–10 year terms, options)
Agreement to Lease (binding pre-lease commitment ahead of fit-out)

Cost drivers

Items that often create surprise bills.

Outgoings (council rates, water, building insurance, repairs — land tax excluded for retail)
10% GST on rent and outgoings (recoverable if tenant is GST-registered)
Annual CPI or fixed % rent reviews; market reviews mid-term and at option exercise
Bank guarantee equal to 3–6 months gross rent + outgoings + GST
Make-good at expiry — base building reinstatement is the costly default
Promotion levy in shopping centres (in addition to outgoings)

Key things to watch in New South Wales

Every Australian state and territory has its own Retail Leases Act framework. Here are top issues we see for tenants in New South Wales:

Retail Leases Act 1994 (NSW)

NSW retail leases are governed by the Retail Leases Act 1994. Section 16 imposes a 5-year minimum term unless the tenant signs a lawyer’s certificate waiving it. The landlord must give a Disclosure Statement at least 7 days before signing — material misstatements can trigger termination rights.

Land Tax Cannot Be Recovered

NSW landlords cannot pass land tax through to retail tenants under the RLA. Audit your outgoings statement annually and refuse any line item labelled "land tax" or that quietly capitalises it into another category.

NCAT for Disputes

Retail lease disputes go to the NSW Civil and Administrative Tribunal (NCAT) Consumer and Commercial Division. NCAT is faster and cheaper than Supreme Court — preserve the right to use it.

Negotiation checklist

Demand the Disclosure Statement and read it line by line

Under s.11 of the RLA the landlord must give a Disclosure Statement at least 7 days before signing. Material misstatements (e.g. understated outgoings) give the tenant termination rights within 6 months. Use it as your outgoings baseline.

Refuse any land tax recovery

Land tax is non-recoverable from retail tenants in NSW. Read the outgoings definition carefully — landlords sometimes re-label or aggregate land tax into another line item. Cross-check with the disclosure statement.

Negotiate the 5-year minimum or sign the waiver consciously

If you want a shorter retail term you must sign a certificate from your lawyer waiving the 5-year minimum (s.16). Don’t sign that waiver casually — it removes a real statutory protection.

Avoid ratchet clauses (already void in retail)

Ratchet clauses (rent can’t go down at market review) are banned in NSW retail leases. For non-retail leases — office, industrial — you must negotiate this out manually.

Bank guarantee with hard return date

Provide a bank guarantee (3–6 months) rather than a cash bond. Require return within 60 days after expiry and make-good completion, and cap the landlord’s drawdown rights to defined defaults.

Define make-good before signing

NSW landlords often default to "base building" or "shell" make-good — strip the fit-out back to bare structure. Negotiate to "good repair and condition" with reasonable wear and tear, or take a photographic Schedule of Condition at handover.

Option to renew with 6+ months notice

Late option exercise extinguishes the option entirely. Push for at least 6 months notice and confirm the renewal rent mechanism (market, CPI or fixed). Diary the exercise date the day you sign.

Common landlord traps

Uncapped outgoings: Council rates, water, insurance and repairs can escalate without a cap — and in some states, land tax sneaks in disguised as another line item.
Aggressive make-good: "Base building" or "original condition" make-good is the most expensive end-of-lease surprise — define the standard precisely.
Missed option notice: Renewal options typically require strict written notice (often 6 months). Late exercise extinguishes the option entirely — diary the date at signing.
Bank guarantee without return deadline: Open-ended landlord drawdown rights and no clear post-expiry return deadline can leave your guarantee locked up indefinitely.

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Official resources

NSW Retail Leases Act 1994 NSW Small Business Commissioner NSW Civil and Administrative Tribunal (NCAT)NSW Fair Trading — retail leases

Other regions

Frequently asked questions

Does the Retail Leases Act 1994 (NSW) apply to my lease?

It applies if the premises are used wholly or predominantly for retail sale of goods or supply of retail services, the business is a type listed in Schedule 1 of the Act, and the premises have a lettable area of less than 1,000 m². Shops of 1,000 m² or larger are excluded, as are most office and industrial leases — confirm coverage before relying on statutory protections.

Can my NSW landlord charge me land tax?

No, not for retail leases. Section 23 of the RLA prohibits the recovery of land tax from retail tenants. Office and industrial leases can include land tax pass-throughs unless negotiated out.

How much bank guarantee is typical in Sydney?

Three to six months of gross rent (rent + outgoings + GST) is standard. Negotiate the amount down, set a hard return deadline post-expiry, and limit the landlord’s drawdown to defined monetary defaults.

Does BizLeaseCheck provide legal advice?

No. BizLeaseCheck highlights common NSW lease risks and helps you compare options quickly, but it is not legal advice. Use it alongside a qualified Australian lawyer or tenant representative.