Importance of Property Leases

Preface: After 20 years of building his business Precision Group, Mr Shaun Bonett (one of Australia’s Top 200 Richest People) says that the most important aspect of business in the Australian Commercial Property Sector is that it is done with a focus on substance and relationships, instead of appearances. Here he shares his insights he has acquired in building his business in Australia.

Having well drafted leases is also a big advantage in obtaining favorable property valuations in Australia. There will always be potential issues between a landlord and a tenant, and having a lease that is drafted in plain English and is reasonable, I believe places a landlord at a decisive advantage to attract and keep quality tenants in their property.

Moreover, if a dispute arises with a tenant, the last thing that you wish a tenant to be able to claim is that the lease that they entered with you is ambiguous and that they were not able to properly understand its terms. If successful, this will result in a tenant being able to avoid their obligations to you under their lease.

A property lease needs to comply with the relevant statutes prescribed in the Australian state that it is in. Australian laws often protect tenants by providing them a minimum length of lease term unless they obtain legal advice that warrants that they are agreeing to a lesser term after being properly advised as to their legal rights.

There are also various laws that require very specific disclosures that a landlord needs to make before a tenant enters a lease, for example whether the landlord has plans to redevelop the property that the tenant is taking a lease in, or on the amounts of outgoings that the tenant will be charged, etc.

My strong advice to any investor in Australian property is to engage a well-respected Australian law firm as well as an accountancy firm to ensure they comply with Australian laws. Australia is a very stable place to invest in because it has an excellent and sophisticated legal system, but as a consequence any investor needs experienced professionals to represent them.

（Shaun Bonett, CEO and Managing Director of Precision Group）