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Tips for Signing Your First Commercial Lease

Searching for retail or commercial space for the first time might be exciting, but there are a few things you need to prepare before signing your lease.

Lease Application

The application must include: 

the details of the business owner 

the names of any lease guarantors 

trade references 

business financials 

the assets and liabilities of the business and its directors 

evidence of identity

Although not required, a business plan is a good addition that will boost your application’s chance of success. Additionally, including business owners’ resumes will emphasise their commercial experience.

Bond/Bank Guarantee

You must have adequate funds in your bank account to pay the bond. A bond is comparable to a security deposit that is paid and held for the duration of the lease. Typically, the security deposit is a minimum of three months of total monthly rent and expenses, but it can go as high as six months. Considerations when determining the bond will include your finances, the landlord's perceived risk, and what both parties agree upon.

A landlord may request either a cash bond held in a bank deposit account or an Agents Trust Account until the lease expires. The alternative option is a bank guarantee.

A bank guarantee is a written undertaking from a bank or financial institution to the landlord to make a payment on demand when required under the lease. Essentially, the Tenant puts the funds in a bank account, where they are held until the Landlord either requests the guarantee or informs the bank that they do not intend to use the Bank Guarantee.

One month's rent must be paid in advance with the application

You must also be able to pay one month's rent in advance as a deposit, which is due at the time of application submission. If your application is approved, the one month's rent will be applied to the first month's rent due date.

Typically, rent is due on the first of each month for the next month. You always pay monthly rent in advance, never in arrears.

Funds available for fit-out purposes

You must ensure that you have sufficient cash to complete your fit-out, if necessary. Ensure that you have quotations and sufficient finances to complete the work as many individuals underestimate the expense of a fit-out.

We recommend that you consult with your accountant, have a business plan in place, and have adequate funds in the bank to cover your rent and outgoings for at least six to twelve months, depending on the nature of your business and whether it is a new enterprise or established.


You will need insurance if your application is approved, and the lease is executed. You will not receive possession of the property until you have obtained the required insurance cover. The requirements for insurance will be specified in the Lease.

Additional funds for utility connection

Finally, you must ensure that you have sufficient finances to transfer the energy, internet, and gas into your name and to pay any required deposits to these companies.

Having a checklist of these items will help facilitate a seamless transition into your new premises.