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ARTICLE · 13 SEPTEMBER 2017

Lease incentives - things to watch out for

Bartier Perry Solicitors
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It is common for landlords to provide tenants incentives in a separate incentive deed to enter into a commercial lease.

AustraliaReal Estate and Construction
Jack Gordon (Formerly With Bartier Perry)
Jack Gordon (Formerly With Bartier Perry)
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It is common for landlords to provide tenants incentives to enter into commercial leases. Incentives can be provided in a number of ways, but the most common are:

  • a fitout contribution,
  • a rent free period,
  • a rent reduction, either by equal reductions in monthly rent instalments over the term of the lease, or with larger reductions at the beginning of the term and smaller reductions for the balance of the term, or
  • a combination of the above.

These arrangements are normally provided for in a separate incentive deed which gives rise to some of the issues addressed below.

Tax matters

There are usually no tax implications where the incentive is provided as a rent free period or by rent abatement.

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