12 Oct 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:
- Security of tenure
- Business stability
- Opportunity to build goodwill
- Sufficient time to recoup the cost of the business investments
- 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.