{"id":226129,"date":"2024-03-12T17:48:16","date_gmt":"2024-03-12T04:48:16","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=226129"},"modified":"2024-03-17T07:24:05","modified_gmt":"2024-03-16T18:24:05","slug":"key-terms-retail-lease","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/property-and-leasing\/key-terms-retail-lease\/","title":{"rendered":"5 Key Terms to Consider in an NZ Retail Lease\u00a0"},"content":{"rendered":"\n

Many small businesses<\/a> choose to enter into a retail lease once they can do so.  As a business owner, now might be the time to finally get a retail space in your ideal location. Before signing a retail lease, you should understand the terms and what they mean for your business. Often a lease agreement will favour the landlord, so you must be prepared to negotiate for terms that benefit you. This article will outline the key terms of a retail lease and how they may affect your business. <\/p>\n\n\n\n

1. Permitted Use of Premises<\/h3>\n\n\n\n

This lease term will outline the purposes for which you can use the property. Before signing your retail lease, you want to ensure that the permitted use is broad so your business has flexibility.<\/p>\n\n\n\n

For example, if the permitted use states that you can only run a bookstore, you can only run a bookstore during your lease. If you decide to start selling coffee and drinks to allow people to sit and read, you could be breaching your lease as your lease does not include food sales. This may also limit your ability to assign or transfer your lease. <\/p>\n\n\n\n

2. Length of the Lease<\/h3>\n\n\n\n

You must consider whether the lease term suits your business needs. When you sign a lease, you are bound for the full term. Short-term leases typically offer flexibility, while long-term leases offer more certainty. If you are just starting your business and testing out the market, consider a shorter lease term. Likewise, if you have found an excellent location at a low price, consider a longer lease to lock in the price.<\/p>\n\n\n\n

A solution may be negotiating a short-term lease with renewal options<\/a>, which can offer your business stability and flexibility. Instead of having a six-year lease, you can have a two year short-term lease that you renew up to three times. This will allow you to use the premises for the same amount of time and move if the location does not suit your business. However, note that when you usually have options to renew, the Landlord will require a market assessment of the rent, and the rent may increase significantly if the market changes.  <\/p>\n\n\n\n

3. Rent Amount<\/h3>\n\n\n\n

Paying rent is an essential component of a lease. When negotiating your lease with your landlord, you want to ensure that you will be able to pay the rent each year, including any rent increases, and if not, you should try to get it reduced. Furthermore, consider whether the rent offered is fair for the area and type of Premises. <\/p>\n\n\n\n

You also need to consider how your base rent will increase over time. Rent reviews<\/a> are commonly done through the following:<\/p>\n\n\n\n