Getting to grips with leases

Monday 11 June 2018

Leases are at the heart of commercial property investment yet many people don’t take the time to understand them and suffer as a result.

One of the major attractions of property for investors is its very tangibility. There’s security and value in bricks and mortar, popular opinion has it.

While this is true, when it comes to commercial properties a huge part of a property’s value is in it the lease that should accompany it.

According to veteran commercial investor Olly Newland, after the location of the building, the lease is the most important component of a property.

Commercial property is a business and the lease is where a large part of the value of that business is, he says.

“A good lease gives a property value so, as a landlord, you want to have as long and secure a lease, with the best quality tenant, as possible, in place.

“And the more it is the more the property should be worth. So the value of the building goes up and down on the quality of the lease terms. It is that simple.”

But the reality is that most people know little about commercial leases and don’t pay enough attention to the details they contain.

This is a mistake for investors who can end up paying, or otherwise running into problems, which could have been avoided if the lease was robust.

For that reason, it is important to find out the finer points of commercial leases.

So, in the latest issue of NZ Property Investor magazine, we set out to provide the following comprehensive run-down of all that investors need to know about them.

We look at standard lease requirements, additional conditions, differences between sectors, how to improve leases, and need to know lease terminology.

To read more about commercial leases, click here to get the digital issue of NZ Property Investor magazine.

Subscribe to NZ Property Investor magazine here to get great stories like this delivered to your mailbox every month.

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