To rent a retail property you need to take out a retail lease (special type of commercial lease) which should run a minimum of five years, which is made up of the original term and any options. You can agree to a shorter period if you give your landlord the required notice within six months of the time you sign the lease.

Signing a lease

Unless you have extensive experience in commercial leasing, get advice from an expert. The government does not have a standard lease agreement so you will need to negotiate the lease conditions with the other party.

The lease defines the type of business you can run from the shop. Once approved, you can’t run any other type of business without the landlord and the council’s consent. You will need to pay for the registration of the lease but the landlord is required to pay the lease preparation costs and mortgagee consent fees.

Lodging a retail bond

As a tenant, you may need to provide the landlord with some form of security (bond) in case you don’t meet the requirements of the lease. Usually this is a cash bond or a bank guarantee but sometimes the guarantee of a third party is acceptable. You must lodge your bond by completing a retail bond lodgment form, which both parties sign, and sending it to the NSW Retail Bond Scheme within 20 days. You can request a retail bond form by email to: rtu@services.nsw.gov.au 

Fitout

Tenants generally pay the cost of installing shop fixtures and fittings (the ‘fit-out’) and at the end of the lease, many tenants must remove the fit-out and return the shop to the condition it was in before the lease began.

Disputes and mediation

If you have a dispute with your landlord or tenant during the tenancy, try to resolve the dispute through informal negotiation. If you can’t resolve the matter, you can apply to NSW Fair Trading for mediation for which a fee is charged. Most matters are settled at, before or a short time after mediation, but if not, then you can take the matter to the Administrative Decisions Tribunal. Generally both sides pay their own legal costs.

Ending a lease

Consider your options well before the end of the lease. Six months before the lease ends, the landlord should write and tell you if they plan to offer you a new lease. At the end of most leases, you go onto a month-to-month tenancy.

Claiming the bond back

At the end of the tenancy, after the final inspection, the tenant and landlord (or agent) needs to complete and sign a Claim for refund of retail bond money form which must be submitted to Fair Trading. If there is no dispute over the bond the tenant should receive the bond within a couple of weeks less any amount that is owed to the landlord.