Understanding a Commercial Lease in Victoria: What Business Owners Need to Know
Commercial Lease insights from Hedwig Legal by Jack Meredith.
When starting or expanding a business in Victoria, choosing the right premises is a critical step — and so is understanding the legal agreement that comes with it. Whether you're leasing an office, warehouse, or other non-retail premises, it's essential to understand how commercial leases in Victoria work, what your rights and obligations are, and where legal risks might arise.
This article provides a practical overview of what a commercial lease involves and answers some of the most commonly asked questions by business owners and startups in Melbourne.
🔍 What is a Commercial Lease?
A commercial lease is a legally binding agreement between a landlord and a tenant, allowing the tenant to use premises for business purposes (excluding retail activity). While retail leases cover premises where goods or services are sold directly to consumers (like shops), commercial leases apply to offices, warehouses, or other non-retail workspaces.
A typical commercial lease in Victoria will cover:
Rent amount and payment schedule
Annual rent increases (e.g. CPI or fixed %)
Payment of outgoings (e.g. council rates, land tax, water)
Responsibilities for maintenance and repairs
What type of business activity is permitted
Conditions for lease renewal
Obligations at the end of the lease (e.g. make good clauses)
Terms relating to breach or early termination
Understanding these terms before signing is critical to avoiding future legal and financial risk.
💰 Who Pays Land Tax in a Commercial Lease in Victoria?
Unlike retail leases (where land tax is typically excluded), commercial leases usually require the tenant to pay land tax. This can be a substantial additional cost — especially for properties in or near Melbourne’s commercial zones.
In addition to rent, tenants may also be responsible for:
Council rates
Water rates
Building insurance
Owners corporation fees
It’s important to clarify which outgoings are payable, and review whether they’re fair and reasonable. These costs can materially impact your business cash flow.
❌ Can You Break a Commercial Lease Early?
In most cases, a commercial lease is fixed-term and cannot be unilaterally ended early without consequences. Unless the lease includes an express termination clause, both parties are expected to honour the full lease term.
However, a lease can be ended early by mutual agreement between landlord and tenant. This is typically formalised in a Deed of Surrender of Lease, which sets out the terms of the early exit.
Seeking legal advice early can help you negotiate flexible terms from the outset, including break clauses or options to assign or sublet the lease.
📝 Does a Commercial Lease Need to Be Registered in Victoria?
In Victoria, unlike some other states, it is not mandatory to register a commercial lease, except in limited circumstances (e.g. very long-term leases or where registration is required by the lease itself).
That said, conducting a title search is essential before signing any lease, to verify that the landlord has legal ownership of the property.
⚖️ Do I Need a Lawyer for a Commercial Lease?
Yes — and here’s why. Most commercial leases are drafted by the landlord’s solicitor, and naturally favour their interests. Without proper legal review, tenants may unknowingly agree to terms that could pose serious risks over time, such as:
Overly burdensome outgoings
Unclear or restrictive use clauses
Harsh “make good” obligations
No exit strategies or renewal flexibility
A Melbourne-based commercial lease lawyer can help you understand your rights, negotiate fair terms, and protect your business from future disputes.
✅ Final Thoughts
Signing a commercial lease is a major commitment. It’s not just about rent — it’s about legal obligations, operational flexibility, and long-term risk management.
Whether you're a small business, startup, or established operator, legal advice before signing a commercial lease can save you time, money, and stress down the road.
Hedwig Legal provides commercial lease advice for Victorian business owners across Melbourne and surrounding suburbs. With deep experience in property and commercial law, we ensure your lease works for your business — not against it.
📍 Based in Melbourne | Flexible consults available | Fixed-fee lease reviews