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FAQ Commercial Real Estate Landlords

What are commercial landlords responsible for in Victoria?

In short, Commercial landlords in Victoria are responsible for ensuring the property is safe and complies with all rules and regulations when the property is handed to a tenant. Additionally, they must attend to any capital expenses that may arise from time to time. It cannot prohibit the occupant from operating the intended business, especially if the plant and equipment are installed for the tenant's benefit.
It's essential to ensure that Lease documentation is prepared correctly and outlines who is responsible for what, etc.

What do I need to consider when leasing my commercial assets?

When leasing a commercial asset, consider the terms and duration of the lease, rental rates, maintenance responsibilities, and any special conditions. It's crucial to vet potential tenants thoroughly and clearly outline expectations to avoid misunderstandings.

Do I need to complete an authority?

In short, yes. When we list your property for sale or lease with CPN Commercial Group, we are dedicated to getting you the best outcome possible. We need to be authorised in writing to dedicate our time and resources to your success. This authorisation also enables us to collect and handle funds on your behalf.

Why do I need a lease?

A lease is essential for establishing the legal terms and conditions of the commercial property arrangement. It outlines the rights and responsibilities of the landlord and tenant, including rent amounts, lease duration, maintenance obligations, and other crucial details. A well-drafted lease helps prevent disputes, identifies responsibilities for both parties and provides a legal framework for the landlord-tenant relationship.

Can CPN prepare my lease documentation?

While we have offered this service in the past, given the ever-changing environment with rules and laws and the dynamic nature of leasing, we no longer offer this service. However, we have competent law firms who can prepare Commercial Leases at competitive costs and would highly recommend this process.

Can I manage my own commercial property?

This is a question we are frequently asked by our clients, particularly of smaller properties. While saving money might be attractive, self-managing your commercial property has trade-offs.

Rules and regulations can often change, and it is our job as agents (or advisors) to stay up to date with these changes. Hence, you are not only paying for someone to invoice your tenants and collect your rent; you are paying for someone to advise you on the correct path to optimise return on your property and protect your investment. The moral of the story is that if you need help understanding commercial property management deeply but want to learn more about it, employ someone who is willing to work with you. While knowledge is power, at CPN, our knowledge is to your benefit, and we love nothing more than walking you through the processes so you best understand why it is done a certain way so that one day, you may have the basic skills to understand and appreciate the product and our service.

You can read more about this in our blog I Want To Manage My Own Commercial Property....We Tell You Why You Shouldn't. - CPN

What are your fees for commercial property management?

Property management fees typically encompass a range of services a property management company provides to oversee and maintain a real estate investment. These fees are charged to property owners generally as a %. They can include rent collection, tenant placement and eviction services, property maintenance and repairs coordination, financial reporting, property inspections, lease enforcement, tenant communication, legal compliance, marketing and advertising, and emergency response. For a clearer understanding of our property management fees, contact our office; our rates align with the industry, expertise, and hands-on service.

Are commercial leases registered in Victoria?

No, commercial leases are not generally registered in Victoria. There are some minor instances where they may be required to be registered, but this will be at the tenant's request and whether the lease registration is necessary based on the occupancy, mortgagee, operation of the business and other factors that may necessitate this process.

How is the rent determined?

Rent for commercial properties is determined through negotiations between the landlord and tenant. Factors such as the property's location, size, condition, and market conditions can influence the agreed-upon rental amount.

How are annual increases and renewal of rents negotiated?

Annual increases are typically negotiated from the outset and are listed on the Commercial Lease agreement. They can either be a percentage or a fixed amount. Some leases may have a market review at the renewal stage, which will require the rent to be standardised against the current market rate. This will require research to ensure the rental is in line with current market trends and is in line with other like-for-like properties.

How long until I receive my rent after the tenant pays?

The lease agreement usually specifies the time it takes for a landlord to receive rent after the tenant pays. It can vary but is commonly on a monthly basis.

Who takes care of the outgoings? Tenant or landlord?

The responsibility for outgoings, such as maintenance, utilities, and other property-related expenses, is determined by the terms of the lease agreement. Depending on the negotiated terms, it could be the tenant, the landlord, or a shared responsibility.

What is the difference between gross and net rentals?

Gross rentals include both the base rent and the outgoings costs. In contrast, net rentals only include the base rent, with the tenant responsible for additional costs such as council rates, water rates, insurance, land tax (if applicable), etc.

What kind of reports do you provide?

Property management companies typically provide financial reports to property owners. Our reports detail income and expenses related to the property, helping owners track the financial performance of their investments. Additionally, our system facilitates multiple payment options for tenants, including credit card, direct debit and bank transfer, allowing you to receive your rent promptly.

What do I do if my property requires maintenance?

As a landlord, you're typically responsible for maintaining the property's structural elements. For urgent repairs, you should attend to them promptly. You may need to follow the terms outlined in the lease agreement for non-urgent repairs. Communication with tenants about maintenance issues is crucial.

I have questions about my commercial property statement. Who should I contact?

Direct inquiries about your commercial property statement to your property manager. They should be able to clarify any details or concerns you may have.

How do we manage tenants not paying rent when it is due?

If a commercial tenant is not paying rent as per the lease agreement, you should follow the stipulated procedures outlined in the lease. This may involve issuing notices and, if necessary, pursuing legal action. Consultation with a legal professional is recommended to ensure compliance with applicable laws.

Can a landlord break a commercial lease in Victoria?

Commercial leases in Victoria typically have fixed terms. Breaking a lease is usually subject to the terms outlined in the lease agreement. It may involve negotiations with the tenant or invoking specific clauses in the lease. Legal advice is crucial to understand your rights and obligations.

Can you evict a commercial tenant in Victoria?

Evicting a commercial tenant in Victoria is a legal process and must adhere to the lease agreement terms and relevant legislation. Non-payment of rent, breach of lease terms, or other specific grounds may be necessary for eviction. Legal advice is strongly recommended to navigate the eviction process correctly.

What is the Retail Lease Act?

The Retail Leases Act in Victoria regulates leases for retail premises. It sets out the rights and obligations of landlords and tenants in retail lease agreements. The Act aims to protect tenants, especially small businesses, by establishing specific standards and procedures for leasing retail spaces.

What is an owner's corporation fee?

An Owners Corporation Fee, or body corporate fee, is a contribution paid by property owners in a multi-unit development to cover the shared costs of maintaining common property and provide adequate insurance for structures and common areas. This fee is relevant in commercial real estate when the property is part of a more significant development where common areas, facilities, and services are collectively maintained.

What is a disclosure statement?

A Disclosure Statement is a document provided by the landlord to the tenant before the signing of a retail lease by the Retail Leases Act. It discloses important information about the lease, such as the terms, rent, outgoings, and any other relevant details. The purpose is to ensure that the tenant clearly understands the key aspects of the lease.

Who pays the land tax?

In Victoria, the responsibility for paying land tax typically falls on the property owner, unless the Retail Leases Act does not apply, in which case the occupant will be responsible for these costs. Land tax is an annual tax levied by the state government on land owners. The amount of land tax is determined based on the total value of the taxable landholdings owned by an individual or entity.

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