Common tenant issues solved by commercial leases

Residential tenants face issues including short leasing periods and increase of rent prices, but experts have said it could be solved by making residential contracts more like commercial leases.

According to Mathew Tiller, head of research and LJ Hooker, commercial style five-year lease agreements and the terms that come with those longer rental periods are worth considering.

There could also be “options” for tenants to increase the length of the contract after two years, seen in commercial leases.

LJ Hooker general manager for property investment management Amy Sanderson said it could benefit both parties.

“After a 12-month period, when everyone is happy, it’s worth having a conversation about a longer-term lease with set rental increases for how much and when it will be,” Miss Sanderson said.

Malcolm Gunning, owner of commercial and residential focused Gunning Real Estate said there are far more features than just the length of tenancies.

“Rent increases could be limited to [inflation], or up for an open market review after three years. That’s what happens with retail leases.

“When you’re on a business-to-business lease, you’re effectively dealing with a shell. If you’re doing a fit-out you have a ‘make good’ clause, so if you paint and put carpet down, it requires pre-consent and the owner has the right to ask for it to be taken down at the end of the tenancy,” Mr Gunning said.