Most commercial leases in New Zealand are based on The Law Association (formerly known as the Auckland District Law Society) standard form. Understanding this document is essential before you sign anything.
The Law Association Deed of Lease
The standard TLA lease form is widely used because both landlords and tenants understand it. It provides a fair starting point for negotiation. However, it's just a starting point, and many clauses can be varied.
The lease usually includes:
- The Reference Schedule (key commercial terms)
- Standard terms and conditions
- Special conditions (variations to the standard)
- Plans showing the premises
Key clauses explained
The initial lease period (e.g., 3 years, 6 years). Longer terms give security but less flexibility. Consider whether the term matches your business planning horizon.
Options to extend the lease for further terms. A "3+3+3" structure means 3 years initial term with two 3-year renewal options. You must exercise renewal rights within strict deadlines.
Starting rent, when it's reviewed, and how. Review mechanisms include fixed increases, CPI-linked, or market review. This determines your cost trajectory for years.
What you can use the premises for. Make sure this is broad enough to cover your business activities and any foreseeable changes and to allow you to assign the lease to another business? Too narrow and you may breach by diversifying.
What costs you pay beyond rent: rates, insurance, maintenance, body corporate, management fees. These can add 20-40% to your effective rent.
Your ability to transfer the lease to someone else or sublet part of the space. Usually requires landlord consent, which can't be unreasonably withheld.
What's NOT in the standard lease
Unlike residential tenancies, commercial leases don't include:
- Automatic protection under the Residential Tenancies Act
- Maximum bond limits
- Mandatory minimum standards for premises
- Restrictions on rent increases
This is why professional review before signing is essential.
Important protections
Look for these protections in your lease:
- Assignment rights: Can you sell your business and assign the lease?
- Subletting: Can you sublet part of the premises if you need less space?
- Early termination: Are there any circumstances where you can exit early?
- Rent abatement: If the premises become unusable, when does rent stop?
We review leases and explain what the terms mean in practice. Contact us on 06 835 7394.
What Carlile Dowling does at this stage
- - Explain every clause that affects you in plain English
- - Identify unusual or unfavourable terms
- - Compare against market standard for similar premises
- - Calculate your true total occupancy cost
- - Highlight issues requiring negotiation