Before you sign, get clear on how long you’re committing to, what flexibility you have, and how your rent will move over time. This is the foundation everything else in the lease sits on.

What “term” really means

The initial term is the fixed period you’re locking in – commonly three, five, or ten years. Term length shapes your risk as much as rent does:

• A shorter term gives you flexibility, but less certainty of tenure, and landlords may offer smaller incentives.
• A longer term gives you security and more leverage for incentives, but locks you in.

There’s no universally right length. It depends on how established your business is, how much you’re investing in fitout, and how confident you are in the location.

Options and rent reviews

Most leases include one or more option periods – the right (not obligation) to extend once the initial term ends. A couple of things to watch:

• Exercise windows. Options must usually be exercised within a set window (e.g. six months before the term ends). Miss it, and the right can lapse. Diarise this the day you sign.
• Further options. Some leases stack multiple option periods (e.g. two further five-year terms), giving long-term security without one large upfront commitment.

Rent typically increases at set intervals, usually annually, under one of these mechanisms:

• Fixed percentage. Rent rises by an agreed percentage each year – predictable, and the most common approach in the current market.
• CPI-linked. Rent moves with inflation – ties your cost to the economy, but less predictable to budget for.
• Market review. Rent resets to current market value, often timed to coincide with an option renewal – this is where options and rent reviews connect, since a market review at renewal can materially change what it costs to stay.

It’s worth checking what your rent looks like in year three and year five under the proposed mechanism, not just the opening figure – small differences compound over a five or ten-year term.

Local context: Canberra vs Sydney

Canberra (ACT): Leases are governed by the Leases (Commercial and Retail) Act 2001 (ACT), which sets tenant-protective defaults – including a minimum five-year term – unless waived. Much of Canberra’s commercial stock also sits on Crown Lease land, so it’s worth checking the Crown Lease’s purpose clause as well as the lease itself.

Sydney (NSW): There’s no statutory minimum lease term in NSW. If security of tenure matters to you, negotiate it directly, through a longer initial term or solid option periods, rather than assuming a minimum applies. The Act does still ban ratchet rent clauses in retail leases, so a market rent review can go down as well as up.

Waiver certificates in ACT leases

In the ACT, you may be asked to sign a waiver certificate – confirmation from your own lawyer that you understand and accept giving up a statutory protection:

• Section 30 Certificate – waives the statutory disclosure timing.
• Section 104 Certificate – waives the minimum five-year term.
• Section 111 Certificate – waives a shopping centre tenant’s preference on renewal.

These can only be signed after independent legal advice. If a landlord asks for one, it means the deal departs from the Act’s default position – while these are fairly common waivers, they’re worth understanding before your lawyer signs off.

Have any queries, feel free to get in touch!