benefits of long term lease

5 Benefits of a signing a Long Term Retail Lease

Benefits of a long term lease

There are many benefits to a long lease, these include:

  1. Security of tenure
  2. Business stability
  3. Opportunity to build goodwill
  4. Sufficient time to recoup the cost of the business investments
  5. Greater value – a business with a long lease generally has greater value than one with a short lease and is easier to sell

By giving your landlord a section 21 certificate, you are waiving your right to a five year lease  

Section 21 of the Retail Leases Act 2003 will not apply to your lease if you give your landlord a copy of the certificate issued by the Small Business Commissioner of Victoria (SBCV).

A lease that is entered into for less than five years (including any options) is not illegal, invalid or unenforceable.  If you do not give the landlord a Five Year Waiver Certificate, the term of the lease is automatically extended by the period that is necessary to comply with section 21.  (Example 1: if a lease is entered into for three years, its term is extended by two years to five years.  Example 2: if a lease is entered into for two years with a one year option, the initial two year term will be extended to four years plus the one year option, giving the tenant a total of five years).

Section 21 doesn’t apply to renewals of leases

Section 21 does not apply to a renewal of lease if there is no break in the tenant’s entitlement to possession of the premises.  This means a renewal of lease is not required to be for five years because the minimum five-year term requirement applied to the lease when it was entered into.

Confused?

Seek legal advice before entering into a new lease.

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