Leases
‘Make Good’ Provisions Can Cost
Leases have ‘make good’ clauses which require the tenant business to restore the premises at the end of the lease. Usually, this is to recondition the premises to the condition it was at the commencement of the lease, save any fair wear and tear. In addition, lease provisions can require refurbishment during the lease term.
The cost of complying with these types of lease provisions as to the tenant business expenses reducing profits. Profit is the key to the value and salability of the business.
As the lease term moves towards the end of the lease, the cost of complying with these lease provisions make a larger impact on the tenant businesses profit level and hence, its value and salability. Where the costs have a substantial impact, they may well make that business unsaleable well before the end of the lease.
Small business owners in particular, should be well aware of the effect of any ‘make good’ and ‘refurbishment/reconditioning’ provisions in a lease before entering into it.
Need more information, talk to me.
Graham Long
Kevin Lovewell
M: 0401 308 385
E: Click here to contact Kevin Lovewell
Member & Registered Business Valuer
Australian Institute of Business Brokers
Graham Long
M: 0428 649 791
E: Click here to contact Graham Long
Member & Registered Business Valuer
Australian Institute of Business Brokers
