Retail lease, Shop 4, 212 Gertrude Street

Commercial lease agreement template with outgoings and fit out terms

A retail lease is decided by three numbers and two clauses: the rent, the review, the outgoings, the fit out contribution and the make good. This 12 page Victorian lease sets all five out in the open, including the outgoings the landlord is not allowed to recover at all.

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Retail premises lease

Shop 4, 212 Gertrude Street

Between Kestrel Holdings Pty Ltd, landlord, and Nash and Fold Barbers Pty Ltd, tenant

Victoria, Retail Leases Act 2003
Term commencing 1 March 2027
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Contents
1. The parties and the premises
1
2. Term and option to renew
3
3. Permitted use
3
4. Rent and rent reviews
3
5. Outgoings
4
6. Security deposit
5
7. Fit out
6
8. Repairs and maintenance
6
9. Make good
7
10. Services, signage and trading hours
7
11. Insurance and indemnity
8
12. Assignment and subletting
8
13. Default
8
14. Damage and destruction
9
15. Disclosure, disputes and the Act
9
16. Notices and general
10
17. Signing
11
1. The parties and the premises

This lease is made on 4 February 2027 between Kestrel Holdings Pty Ltd, ABN 71 338 204 615, of Level 2, 90 Smith Street, Collingwood VIC 3066, called the landlord, and Nash and Fold Barbers Pty Ltd, ABN 26 550 118 743, called the tenant, for Shop 4 at 212 Gertrude Street, Fitzroy VIC 3065, a ground floor retail tenancy of 64 square metres with a rear store room and shared access to the waste enclosure off the laneway.

$48,000
Rent, year one
5 years
Term
5 years
Option
3% a year
Review
Lease particulars
Premises
Shop 4, 212 Gertrude Street, Fitzroy VIC 3065, 64 square metres
Lot entitlement
9.4 percent of the owners corporation
Commencement date
1 March 2027
Expiry date
28 February 2032
Option to renew
One further term of five years
Permitted use
Barbershop and the retail sale of grooming products
Security deposit
Bank guarantee of $13,200
Disclosure statement given
12 January 2027
1.1
What is included and what is not
The premises include the shop floor, the store room, the internal fittings listed in the condition report and the exclusive right to the shopfront signage zone. They do not include the roof, the external walls, the awning, the grease trap or the waste enclosure, which stay with the landlord and the owners corporation.
1.2
The condition report
The parties sign a condition report before the tenant takes possession, recording the state of the premises with dated photographs. The summary below is part of that report. Anything not recorded in it is taken to have been in good repair at the start of the term, so both parties check it before signing rather than after.
Element
Condition at handover
Responsibility
Floor, polished concrete
Sound, two hairline cracks near the rear door photographed
Tenant to maintain
Walls and ceiling
Painted white, minor scuffing to the west wall
Tenant to maintain
Shopfront glazing
Intact, aluminium frame, door closer working
Tenant to maintain
Air conditioning
Split system, serviced 14 January 2027, working
Tenant to service
Plumbing to the rear store
Capped water and waste, no basin installed
Tenant fit out
Electrical board
Single phase, 40 amp, compliance certificate held
Landlord
2. Term and option to renew
2.1
Five years
The term is five years, starting on 1 March 2027 and ending on 28 February 2032. The Retail Leases Act 2003 sets a minimum term of five years for a retail premises lease, made up of the term and any option, unless the tenant gives the landlord a certificate from the Victorian Small Business Commission before the lease is entered into. No certificate is given here, so the term is five years.
2.2
The option, and the reminder the landlord has to send
The tenant may renew for a further five years by giving written notice between 1 September 2031 and 30 November 2031, provided the rent is paid up to date and no notice of breach is outstanding. The landlord must remind the tenant in writing of the last day for exercising the option at least three months before that day, as the Act requires, and where the reminder is late the last day moves out so the tenant still has three months.
3. Permitted use
3.1
A barbershop, and nothing else without consent
The premises are used as a barbershop and for the retail sale of related grooming products, and for no other purpose without the written consent of the landlord, which is not unreasonably withheld. The tenant obtains and keeps current every registration, permit and health approval its use needs, including registration with the City of Yarra for a hairdressing premises, and gives the landlord a copy on request.
3.2
No warranty about the use
The landlord does not warrant that the premises may lawfully be used as a barbershop. The tenant has made its own enquiries of the council and is satisfied about the planning permission, the plumbing and the ventilation before signing.
4. Rent and rent reviews
4.1
How rent is paid
Rent for year one is $48,000 plus GST, paid monthly in advance as $4,000 plus GST on the first day of each month by direct debit. Rent is paid without deduction or set off. The first month is payable on 1 March 2027.
4.2
Fixed reviews, one basis each time
Rent increases by 3 percent on each anniversary of the commencement date. The Act allows only one basis of review at any one review, so there is no market review, no turnover rent and no ratchet clause in this lease. Rent for the option term is reviewed to market at the start of that term, determined under the Act if the parties cannot agree.
Lease year
From
Rent a year
Rent a month
Year 1
1 March 2027
$48,000.00
$4,000.00
Year 2
1 March 2028
$49,440.00
$4,120.00
Year 3
1 March 2029
$50,923.00
$4,243.58
Year 4
1 March 2030
$52,451.00
$4,370.92
Year 5
1 March 2031
$54,024.00
$4,502.00
Rent over the five year term, before GST
$254,838.00
4.3
GST
Every amount in this lease is exclusive of GST unless it says otherwise. The tenant pays GST on the rent, the outgoings and any other taxable supply at the same time as the amount it relates to, and the landlord gives a tax invoice for each payment.
5. Outgoings
5.1
What the tenant pays
The tenant pays the outgoings in the table below for the premises, monthly in advance against the annual estimate, adjusted after the annual statement. The estimate for year one was given to the tenant with the disclosure statement before this lease was entered into, and a new estimate is given at least one month before the start of each following year.
Outgoing
Basis
Year one estimate
Council rates
Assessment for the tenancy
$2,400.00
Water rates and service charges
Assessment for the tenancy
$900.00
Owners corporation fees
Lot entitlement, 9.4 percent
$3,600.00
Building insurance
Lot entitlement, 9.4 percent
$1,500.00
Common area cleaning and lighting
Lot entitlement, 9.4 percent
$1,200.00
Estimated outgoings, year one
$9,600.00
Outgoing
Basis
Year one estimate
Council rates
Assessment for the tenancy
$2,400.00
Water rates and service charges
Assessment for the tenancy
$900.00
Owners corporation fees
Lot entitlement, 9.4 percent
$3,600.00
Building insurance
Lot entitlement, 9.4 percent
$1,500.00
Common area cleaning and lighting
Lot entitlement, 9.4 percent
$1,200.00
Estimated outgoings, year one
$9,600.00
Outgoing
Basis
Year one estimate
Council rates
Assessment for the tenancy
$2,400.00
Water rates and service charges
Assessment for the tenancy
$900.00
Owners corporation fees
Lot entitlement, 9.4 percent
$3,600.00
Building insurance
Lot entitlement, 9.4 percent
$1,500.00
Common area cleaning and lighting
Lot entitlement, 9.4 percent
$1,200.00
Estimated outgoings, year one
$9,600.00
Land tax is not an outgoing under this lease
The Retail Leases Act 2003 does not allow a landlord to recover land tax from a tenant of retail premises. Land tax is not in the table above, is not billed to the tenant, and is not recoverable as any other charge.
5.2
Costs the tenant never pays
Beyond land tax, the following are not outgoings and are not recovered from the tenant in any form.
Capital works and any structural repair to the building
Depreciation of the building or of plant owned by the landlord
Contributions to a sinking fund
Interest, bank charges and the cost of finance on the property
Any fine or penalty the landlord incurs
5.3
The annual statement
Within three months of the end of each accounting period the landlord gives the tenant a written statement of the outgoings actually incurred, prepared and audited as the Act requires. Where the tenant has paid more than its share, the difference is credited against the next month rent, and where it has paid less, the difference is payable within 28 days of the statement.
6. Security deposit
6.1
A bank guarantee, not cash
Before the term starts the tenant gives the landlord an unconditional bank guarantee for $13,200, which is three months rent plus GST at the year one rate, with no expiry date. The landlord may call on it for unpaid rent, unpaid outgoings, or the cost of making good a breach, after giving the tenant 10 business days written notice. The tenant tops the guarantee back up within 20 business days of any call.
6.2
Return of the guarantee
The landlord returns the guarantee within 30 days after the later of the end of the lease, the tenant vacating, and the make good obligations being met, less any amount properly called on and itemised in writing.
7. Fit out
7.1
Plans, approvals and the rent free period
The tenant fits out the premises at its own cost to plans the landlord approves in writing before work starts, and obtains every permit the work needs. The tenant has a rent free fit out period of eight weeks from 1 March 2027, during which outgoings are still payable. The landlord contributes $15,000 plus GST towards the fit out, paid within 21 days of the tenant opening for trade and giving the landlord the occupancy documents and paid invoices.
7.2
Fit out standards
The fit out is carried out to the standards below, and the landlord may stop work that does not meet them until it is put right.
1.
All work is carried out by licensed trades holding current insurance, outside the hours the owners corporation sets for noisy work.
2.
Copies of the building permit, the plumbing compliance certificate and the electrical certificate of compliance go to the landlord within 10 business days of completion.
3.
No penetration of the slab, the roof or an external wall without written approval of the plan showing it.
4.
The extraction fan serving the rear store is ducted to the point the landlord nominates and is fitted with a silencer.
5.
The tenant makes good any damage to the common property caused by the fit out, at its own cost, within 10 business days.
7.3
Who owns the fit out
The fit out belongs to the tenant during the term. The basin plumbing, the extraction fan, the shopfront glazing and any work fixed to the structure become part of the premises and belong to the landlord at the end of the term unless clause 9 requires their removal.
8. Repairs and maintenance
8.1
Who fixes what
The tenant keeps the premises in the condition recorded in the condition report, fair wear and tear excepted, and reports a defect in the landlord items within two business days of noticing it. The landlord maintains the structure, the roof, the external walls and the services up to the point they enter the premises, and does the capital works the Act makes it responsible for.
Item
Repaired by
Serviced how often
Structure, roof, external walls, awning
Landlord
As required
Air conditioning unit serving the shop
Tenant
Every six months
Hot water service and basin plumbing
Tenant
As required
Shopfront glazing and door hardware
Tenant
As required
Fire extinguisher and exit signage
Landlord
Every 12 months
Grease and hair trap in the waste line
Tenant
Every three months
9. Make good
9.1
What the tenant leaves behind
At the end of the lease the tenant removes its fit out, signage, cabling and equipment, repairs any damage the removal causes, patches and repaints the walls in the landlord standard colour, replaces damaged floor coverings and ceiling tiles, and leaves the premises professionally cleaned and in the condition recorded in the condition report, fair wear and tear excepted.
9.2
The landlord may ask for some of it to stay
At least 30 days before the end of the lease the landlord may tell the tenant in writing which parts of the fit out it would like left in place. Anything the landlord asks to keep is left, clean and working, and the tenant is not charged for removing it. Anything not mentioned is removed.
10. Services, signage and trading hours
10.1
Meters, signs and opening
The premises are separately metered for electricity and the tenant holds that account. Signage in the shopfront zone is at the discretion of the tenant, subject to any council permit and to the owners corporation rules, and the tenant removes it at the end of the lease. The tenant opens at least from 9.00 am to 5.00 pm Tuesday to Saturday and may open at other times. The landlord does not require the tenant to open outside those hours and does not charge for doing so.
11. Insurance and indemnity
11.1
What each party insures
The tenant holds public liability insurance of at least $20 million noting the interest of the landlord, plate glass cover for the shopfront, and insurance over its own fit out, stock and equipment, and gives a certificate of currency before the term starts and within five business days of each renewal. The landlord insures the building and the common property, the cost of which is an outgoing under clause 5. The tenant indemnifies the landlord against loss caused by the tenant, its staff or its customers, other than loss caused by the landlord.
11.2
What the landlord is not liable for
The landlord is not liable for loss of stock, equipment or profit caused by a burst pipe, a power failure, a break in, or the act of another occupier of the building, unless the landlord caused it. The tenant carries its own cover for those losses. Nothing in this clause limits a liability the law does not allow to be limited.
12. Assignment and subletting
12.1
Consent, and what the landlord may ask for
The tenant may assign the lease or sublet with the written consent of the landlord, which is not unreasonably withheld where the proposed assignee has the financial resources and retail skills to meet the obligations, and where the tenant has given the assignee the disclosure statement the Act requires. The landlord may ask for a guarantee from the directors of the assignee and for the reasonable legal costs of preparing the consent.
12.2
A change of ownership of the tenant
A transfer of more than half the shares in the tenant company counts as an assignment and needs the same consent. The tenant tells the landlord in writing within 10 business days of any change in its directors or shareholders.
13. Default
13.1
When the landlord may act
The tenant is in default if rent or outgoings are unpaid for 14 days, if it breaches another term and does not fix the breach within 14 days of written notice, or if it becomes insolvent. Before re entering, the landlord gives the notice the law requires and allows the time that notice gives. Interest of 8 percent a year is charged on money unpaid for more than 14 days, worked out daily.
13.2
If the landlord is the one in default
Where the landlord does not carry out a repair it is responsible for within a reasonable time of written notice, and the tenant cannot trade properly as a result, the tenant may carry out the repair and recover the reasonable cost, up to one month rent, by deduction from the next rent payment, after giving the landlord 10 business days written notice of what it intends to do and what it will cost.
14. Damage and destruction
14.1
If the premises are damaged
If the premises are damaged and cannot be used, rent and outgoings abate in proportion to how much of the premises cannot be used, from the date of the damage. If the landlord tells the tenant it will not repair, either party may end the lease on seven days written notice. Neither party is liable to the other for ending the lease under this clause.
14.2
Essential safety measures
The landlord maintains the essential safety measures for the building and keeps the records the building regulations require. Where a measure serves only the premises, the tenant maintains it and gives the landlord a copy of each service record within 10 business days.
15. Disclosure, disputes and the Act
15.1
The disclosure statement
The landlord gave the tenant a disclosure statement and a copy of the proposed lease at least 14 days before this lease was entered into, on 12 January 2027, as the Act requires. The tenant confirms it received them and had the chance to obtain its own advice.
15.2
How a dispute is handled
A dispute is first raised in writing and the parties meet within 10 business days. If it is not settled, either party refers it to the Victorian Small Business Commission for mediation before starting proceedings, and then to the Victorian Civil and Administrative Tribunal. Nothing in this lease takes away a right the Retail Leases Act 2003 gives either party, and a term that conflicts with the Act has no effect to the extent of the conflict.
16. Notices and general
16.1
Notices, costs and the whole agreement
Notices are given by email to leasing@kestrelholdings.example and to hello@nashandfold.example, and in writing to the addresses on page one. Each party pays its own legal costs of this lease, and the tenant pays the stamp duty and registration fees the law puts on it. This lease, the disclosure statement and the condition report are the whole agreement between the parties. This lease is governed by the law of Victoria.
16.2
Waiver, severance and further assurance
A right is not waived because a party does not enforce it straight away, and a waiver on one occasion is not a waiver on another. If a term is found to be invalid it is severed and the rest of the lease continues. Each party signs whatever document is reasonably needed to give effect to this lease, including any consent the owners corporation requires.
17. Signing
17.1
Execution and copies
Each party signs below. The landlord gives the tenant a signed copy of this lease within 28 days of it being returned to the landlord signed by the tenant, as the Act requires, together with the signed condition report.
For Kestrel Holdings Pty Ltd
Name
:
Position
:
Date
:
For Nash and Fold Barbers Pty Ltd
Name
:
Position
:
Date
:

Section by section

What each section is for, so you can keep the ones you need and drop the rest.

Contents
Seventeen numbered sections across a twelve page lease including the cover.
1. The parties and the premises
Both companies, the shop, a lease particulars block and a condition report summary table.
2. Term and option to renew
The five year minimum term, the option window and the reminder the landlord must send.
3. Permitted use
A barbershop and related retail, the permits the tenant holds, and the no warranty clause.
4. Rent and rent reviews
Monthly payment, fixed 3 percent reviews, the five year rent table and GST.
5. Outgoings
The estimate table, the land tax callout, the costs the tenant never pays and the annual statement.
6. Security deposit
A $13,200 bank guarantee, when it can be called on and when it is returned.
7. Fit out
Plans and permits, the rent free period, the $15,000 contribution, fit out standards and ownership.
8. Repairs and maintenance
Who fixes what, and a table of items with the responsible party and the service interval.
9. Make good
What the tenant removes and repairs, and the landlord right to ask for parts of the fit out to stay.
10. Services, signage and trading hours
Metering, the signage zone, and minimum trading hours with no charge for opening outside them.
11. Insurance and indemnity
What each party insures, certificates of currency, and what the landlord is not liable for.
12. Assignment and subletting
Consent not unreasonably withheld, and what counts as a change of ownership of the tenant.
13. Default
When the landlord may act, the notice required first, and interest on overdue money.
14. Damage and destruction
Rent abatement in proportion, ending the lease, and essential safety measures.
15. Disclosure, disputes and the Act
The disclosure statement 14 days out, mediation through the Small Business Commission, and the Act prevailing.
16. Notices and general
Notices, costs, waiver and severance.
17. Signing
Execution and the signed copy the landlord returns within 28 days.
Signatures
A block for each company with name, position and date.

Clauses in this document

How to adapt this agreement

For an office or warehouse rather than a retail shop, the Retail Leases Act does not apply, so delete the minimum term clause, the land tax exclusion and the disclosure statement section, and negotiate those points openly instead, because none of them is given to you by statute. For a market rent review rather than a fixed percentage, replace clause 4.2 with a valuation mechanism naming who appoints the valuer, what happens if the parties disagree and when the new rent takes effect, and keep the single basis rule. For a tenant fitting out a food business, expand clause 7.4 to cover the grease trap, the mechanical exhaust and the health registration, and move the trap servicing in the repairs table from three months to monthly.

Which law the terms follow

The Retail Leases Act 2003 governs this lease because a barbershop is retail premises. The Act sets the five year minimum term unless a Small Business Commission certificate is given, requires a disclosure statement and a copy of the proposed lease at least 14 days before the lease is entered into, requires outgoings estimates and an annual statement, prevents land tax being recovered from the tenant, allows only one basis of rent review at any review, and requires the landlord to remind the tenant of the last day to exercise an option at least three months beforehand. Disputes go to the Victorian Small Business Commission for mediation before the Victorian Civil and Administrative Tribunal. GST is charged at 10 percent on rent and outgoings.

What makes this document work

The rent table shows the whole term, not the first year

Five rows at 3 percent compounding, from $48,000 to $54,024, with the monthly figure beside each and $254,838 as the total before GST. A tenant signing a five year lease is committing to that total, and very few leases put it on the page.

Land tax is excluded in a callout, not buried in a definition

The Retail Leases Act 2003 does not allow land tax to be recovered from a retail tenant, so the callout under the outgoings table says it is not in the table, not billed and not recoverable as any other charge. Clause 5.2 then lists five more costs the tenant never pays.

Make good runs both ways

Clause 9.1 lists exactly what the tenant removes and repairs, then clause 9.2 lets the landlord ask in writing, at least 30 days out, for parts of the fit out to stay, with no removal charge for anything it keeps. That is the clause that turns a make good argument into a conversation.

Questions people ask

What should a commercial lease agreement include?

The premises and what is excluded, the term and any option, the permitted use, the rent and the review basis, the outgoings and how they are estimated and reconciled, the security, fit out and make good, who repairs what, insurance, assignment, default and dispute resolution. This lease covers each in a numbered section.

Can a landlord charge land tax to a retail tenant in Victoria?

No. The Retail Leases Act 2003 does not allow land tax to be recovered from a tenant of retail premises, which is why it does not appear in the outgoings table and why the callout says it is not recoverable under any other name either. Attempting to recover it under a different label does not work.

How long is a retail lease in Victoria?

The Act sets a minimum of five years, made up of the term and any option, unless the tenant gives the landlord a certificate from the Victorian Small Business Commission before the lease is entered into. Clause 2.1 states that and notes that no certificate is given here, so the term is five years.

What is a ratchet clause and does this lease have one?

A ratchet clause prevents rent falling at a market review. This lease has none, and clause 4.2 says so, along with no turnover rent and no market review during the term. The reviews are fixed at 3 percent a year, which is a single basis of review as the Act requires.

How much security deposit is normal?

Three months rent is common for a small retail tenancy. Clause 6.1 takes an unconditional bank guarantee for $13,200, which is three months rent plus GST at the year one rate, callable on 10 business days written notice and topped back up within 20 business days.

Who pays for the fit out?

The tenant, to plans the landlord approves. Clause 7.1 gives the tenant an eight week rent free fit out period, with outgoings still payable, and a landlord contribution of $15,000 plus GST paid within 21 days of opening and producing the occupancy documents and paid invoices.

How are disputes resolved under a Victorian retail lease?

Clause 15.2 requires the parties to raise the issue in writing and meet within 10 business days, then refer it to the Victorian Small Business Commission for mediation before starting proceedings, and then to the Victorian Civil and Administrative Tribunal.

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Sources

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