Business Law

Commercial Leases in NSW:7 Common Questions & Answers

July, 2014

By Gavin Hanrahan

Legal Disclaimer

This presentation is offered for general information

purposes only. It does not constitute specific legal

advice or opinion. You should not act or rely upon any

of the information contained within this seminar

without seeking the advice of a qualified solicitor who

specialises in the particular area of expertise and

jurisdiction that you require.

1. Is stamp duty payable on the creation or assignment of a lease?

Since 1 January 2008, stamp duty has not been payable on a Commercial Lease executed on or after that date.

However, it is still payable on the transfer or assignment of a Lease.

2. How long can a lease term be?

Generally there is no restriction on the term of a Lease, but it must be fixed with certainty.

3. Must the landlord allow a tenant to renew?

If the Lease contains an option to Lease for a further term, the landlord will be bound by that option.

4. Is the landlord allowed to charge any amount for rent?

Essentially “yes”. No restrictions apply to the amount of rent that can be charged for commercial and industrial premises.

However, during the term of the Lease, rent can only be increased in accordance with the rent review provisions in the Lease.

Retail leases, which are a special type of commercial lease, do have statutory restrictions imposed on the timing and method of increasing rent during the term of the lease.

5. Can a tenant assign the Lease, or sublease, without landlord’s consent?

Generally, unless the Lease specifically prevents assignment or sub-leasing, the tenant has that right and doesn’t require the Landlord’s consent.

However, most Commercial Leases will contain a term requiring the Landlord’s consent to be obtained before the Lease can be assigned or sub-let, or prohibiting it entirely.

6. What is a security deposit?

A Security Deposit is typically an amount equivalent to one or two month’s rent, which is deposited by the tenant to secure, as far as money can, the tenant’s performance of the tenant’s obligations under the Lease.

6. What is a security deposit? Cont…

Under the Retail Leases Act 1994 (NSW) a Landlord is required to lodge a security deposit with the Director-General of the Department of State and Regional Development.

However, under your normal Commercial Lease, a Landlord generally is at liberty to deal with the Security Deposit as they see fit, so long as it is repaid, in part or in full, if required under the Lease.

7. Are there any formal requirements for the execution of a lease?

For land under the provisions of the Real Property Act 1900 (NSW) (which is most land in NSW) a Lease for a term in excess of three (3) years must be effected by executing a Lease in the approved form and the Lease must be registered, in order to pass to the Tenant an enforceable leasehold estate.

7. Are there any formal requirements for the execution of a lease? Cont…

If such a Lease is not registered, the Tenant would only have an equitable interest and it would be unenforceable against a competing registered interest.

Please Note: Always get them in writing!

Get your commercial lease prepared in writing by an experienced business lawyer BEFORE the arrangement comes into effect. This applies to all commercial transactions, not just leases.

We’ve written an article on this topic, click below to read more and find out why this is so important!

Commercial Leases – Always get them in writing!

Turnbull Hill Lawyers – Contact Us

If you have any further questions about commercial leases or you'd like to discuss a related matter, please do not hesitate to call me:

Gavin Hanrahan on:

1800 994 279 or email

I will endeavour to respond to your enquiry within 24 hours.