Australia Commercial Lease Guide

Commercial Lease Guide for Australia

A practical, tenant-focused guide to Australian 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 professional.

What to know before you sign

Australia regulates retail leases at the state level — every state and territory has its own Retail Leases Act (RLA) imposing disclosure obligations, outgoings rules and minimum tenant protections that do not apply to office or industrial leases.

Australian tenants need to plan for outgoings (not "CAM"), 10% GST on rent, bank guarantees rather than cash bonds, and the make-good obligation at expiry, which is often where landlord and tenant disputes actually crystallise.

Major markets

Where commercial activity concentrates.

Sydney
Melbourne
Brisbane
Perth
Adelaide
Canberra
Hobart

Common lease types

Typical structures and what to watch.

Retail lease governed by state Retail Leases Act (mandatory disclosure statement)
Office lease (commercial, RLA does not apply — fewer statutory protections)
Industrial / warehouse lease (typically net + outgoings, longer terms)
Heads of Agreement / Agreement to Lease (binding pre-lease commitment)

Cost drivers

Items that often create surprise bills.

Outgoings recoveries (council rates, water rates, land tax in some states, building insurance, repairs)
GST at 10% on rent and outgoings (recoverable if tenant is GST-registered)
Annual rent reviews (fixed %, CPI, or market — ratchet clauses banned in retail leases)
Bank guarantee (typically 3–6 months rent + outgoings + GST)
Make-good cost at end of term (strip-out, repaint, reinstate base building)
Promotion / marketing levy in shopping centres

Key things to watch in Australia

Lease structures and statutory protections vary by country. Here are top issues we see for tenants in Australia:

State Retail Leases Acts (RLA)

Each state and territory has its own Retail Leases Act setting tenant-protective requirements for retail leases (disclosure statements, prohibited terms, minimum 5-year terms in some states). The RLA does not apply to all commercial leases — check applicability before assuming protections.

Outgoings and GST

Outgoings (operating expenses) are typically passed through under the lease. GST (10%) applies to commercial rent and outgoings. Negotiate a clear outgoings definition with audit rights and exclusions for capital items.

Make-good obligations

"Make good" requires the tenant to return the premises to a defined condition at end of term — sometimes original (shell) condition, which can be expensive. Negotiate make-good to "good repair and condition" or carve out tenant fit-out.

Bank guarantees and security deposits

Bank guarantees of 3–6 months rent are standard. Negotiate amount, return timing on lease end, and avoid landlord rights to draw without notice.

Negotiation checklist

Get the Disclosure Statement (retail leases)

Under every state RLA the landlord must give a Disclosure Statement at least 7–14 days before lease signing. Review estimated outgoings, lease incentives, and permitted use carefully — material misstatements give the tenant termination rights.

Cap or define outgoings precisely

Require an itemised outgoings estimate, annual reconciliation, and exclusion of land tax in jurisdictions where it cannot be passed through to retail tenants (e.g. land tax is non-recoverable from retail tenants in NSW, Vic, Qld).

Avoid ratchet clauses

Retail Leases Acts ban ratchet clauses (a clause preventing rent from going down at a market review). For non-retail leases, negotiate this out manually — a ratchet is one-way risk to the tenant.

Option to renew with realistic notice

Negotiate an option to renew with at least 6 months notice and confirm the renewal rent mechanism (market, CPI, or fixed). Late exercise can extinguish the option entirely — diary the date.

Bank guarantee instead of cash bond

Provide a bank guarantee (3–6 months rent + outgoings + GST is typical) rather than a cash bond. Cap the guarantee, require return within a defined period after expiry, and avoid open-ended drawdown rights.

Define make-good precisely

Make-good is the single biggest end-of-lease cost surprise. Define the standard (base building, original condition, or photographic Schedule), include reasonable wear and tear, and consider cash settlement options.

Permitted use and exclusivity

Confirm the permitted use is broad enough for future pivots. In shopping centres, ask for exclusivity over competing uses if your concept depends on it.

Common landlord traps

Uncapped pass-throughs / outgoings: Operating costs, taxes, and insurance can rise year-to-year without a cap unless negotiated.
End-of-term reinstatement / make-good / dilapidations: Costs can be substantial; negotiate a Schedule of Condition or carve-outs.
Notice deadlines: Renewal, break, and option rights typically depend on strict written notice windows — calendar at signing.

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Official resources

business.gov.au — commercial leases NSW Small Business Commissioner Vic Small Business Commission Australian Taxation Office — GST on commercial property

Other regions

Frequently asked questions

Does the Retail Leases Act apply to my lease?

It applies if the premises are used wholly or predominantly for retail sale of goods or supply of retail services and meet the state-specific area and turnover thresholds. Office, industrial and large-format leases are usually outside the RLA and have fewer tenant protections.

Can my landlord pass on land tax in Australia?

It depends on the state. In NSW, Victoria and Queensland, land tax cannot be recovered from retail tenants under the relevant Retail Leases Act. In commercial (non-retail) leases land tax is negotiable and often passed through.

What is "make-good" and why does it matter?

Make-good is the tenant's obligation to return the premises to a defined condition at lease end — often base building or original condition. It is frequently the largest unbudgeted cost a tenant faces and should be defined with a photographic Schedule of Condition.

Is GST charged on commercial rent in Australia?

Yes, GST applies at 10% to commercial rent and outgoings where the landlord is registered. GST-registered tenants can usually claim input tax credits, but the cash-flow timing still matters.

Does BizLeaseCheck provide legal advice?

No. It helps you spot common risks and compare leases quickly, but it is not legal advice. Use it alongside an Australian commercial lease lawyer for your jurisdiction.