Your lease is expiringAre you sure you wil l get your bond back

With this in mind it is important to know what wil lbe required of you when your current officereaches it tenure and the steps required to ensurethat your office move is as effortless and costeffective as possible This article aims to explainthe process of a makegood and the critical dorsquosand donrsquots when it comes to deal ing with yourlandlord and selecting a makegood provider

Final ly we wil l explain critical dates and timeframesof a makegood and the approximate costs involvedI t is always a good idea to make a note of your leaseexpiry date This date is important because you wil lneed to make a choice about whether you decide tostay in your current office and renew your lease orsearch for an exciting new home for your business

From the moment you decide you are going to

move office you need to consider a number of

things including

1 Relocating your furniture and equipment

2 Possible loss of business on the move

3 Finding a new space

4 Connecting services

5 Changing stationary

6 Getting everyone settled so business can resume

as usual

7 And final ly the most important Handing over your

old office back to the landlord

Without proper makegood planning you could be

forced to accept an over-inflated settlement figure

from your landlord

You may pay additional unnecessary rent unti l youeither complete a makegood or come to anagreement with your landlord on what is expected in amakegood or worse loose part or al l of your bond

The Process

I n order to mitigate your risks during the process youshould do four things In this order Agree a scope

with the Landlord ask for a settlement figure (cost towalk away without having to do a makegood) decideon makegood option Lastly handover the property

1 Know what youre up for Negotiate a scopeNegotiation of a scope wil l help you keep the bui ldingcosts down for your makegood Requesting a scopeof works upfront wil l give you time to negotiate andexecute it efficiently Without it you have no ideawhat the landlord can legal ly expect from you

A scope of works is simply a checkl ist of items youare required to complete prior to the landlordaccepting the tenancy back I t usual ly involvesdemol ishing al l internal partitions joinery furniture (ornon standard instal lations) repairing or replacingcarpet cei l ing grids and other elements altered whenyou entered the premises You are usual ly alsoobl iged to remove al l electrical and data cabl ingcompletely and return al l plumbing fire andmechanical services back to how they were original ly

A scope is based on the interpretation of yourcommercial lease agreement s lsquoMakegood ClausersquoThe strength of this clause varies across differentcommercial leases but almost al l are written vaguelyor al l inclusively usual ly al l in favour of the landlord

2 Ask for a settlement Figure

Asking for a settlement figure wil l put you in aposition to choose the most cost-effective solution foryour move

Once a scope is agreed your landlord may request foryou to go out to the market and find prices for thescope and return these prices to them through thefaci l i ty manager of the bui lding The main reason forthis is that they may then use this information tostrike a settlement figure with you

As a business owner occupying a commercial space you wil l most definitely atsome stage in your business l ifecycle decide that you have outgrown your officeMaybe you l l require less (or no) space or a brand new exciting space

The landlord may then present you an over-inflatedprice from a bui lder of their choosing in order tostrike a median point between their bui lders and the(usual ly) much cheaper prices you have received fromother makegood providers

I f you are struggl ing to receive a settlement figurefrom your landlord it is usual ly because the later thesettlement figure is given the more l ikely you wil l beto accept it due to time restrictions on your lease

For tips on how to negotiate with your landlord inthis instance please contact our office for somefree advice

Needless to say there is an opportunity for you tosave money here by agreeing a fair scope of works inthe first place and carrying out the makegoodyourself

3 Decide On MakegoodOnce you have a settlement figure (at least a monthin advance of lease expiry and longer for tenanciesover 500m2) you have two options

a) Take the settlement figure and walk away or

b) Carry out the makegood (and most l ikely save

costs)

I f the settlement figure is less than your cost to makegood it is usual ly an indication that the landlord hasan incoming tenant who wishes to keep the fitout asis I n this case option (a) would be your best choice

I f the settlement figure is more than your cost tomakegood option (b) would be your best choice

4 Carry Out MakegoodThis section wil l help minimise risks and unnecessarycosts to you when executing a makegood I f option(b) is your preference it is best to engage amakegood provider wel l in advance agree on acommencement date and completion date (andconsequences for non completion) and lock it in I t is also recommended to put the bui lding managerandor faci l i ty manager in contact with the makegoodprovider and have them l iase directly on theirrequirements

Good communication l ines with al l relevantstakeholders and a clear written scope of works arethe most critical elements in ensuring a seamlessdel ivery of your makegood

5 HandoverUsual ly when a makegood is completed it is arequirement of the faci l i ty manager that the property -including any keys - are handed over and the work isinspected for qual ity and completion A pre-handovermeeting is also helpful in identifying any issues priorto completion by the providerI t is important that you al low a sufficient bufferbetween handover date and your lease expiry date sothat if you (or the bui lder) have overlookedsomething you have some time to fix it before thelandlord charges youadditional rent or lsquoLiquidated Damagesrsquo which quitesimply refers to delay costs Ensure that the scope ofworks has been completed in its entirety I f there isno scope of works agreed prior to carrying out amakegood handover wil l become difficult if there isany disagreement

TimeframeHanding over on time is important as somecommercial leases heavi ly penal ise Lessees if they donot vacate the property when prescribed This couldinclude costs known as lsquoLiquidated Damagesrsquo(otherwise known as delay costs) Your landlord isable to charge these costs to you especial ly if theyhave signed a new tenant close to the handover date

With the above in mind it is important that you al lowsay a week buffer between your anticipatedcompletion date and your handover date This wil la l low sufficient time to handover and avoidunnecessary additional rent costs

Your lease is expiringAre you sure you wil l get your bond back

From the moment you decide to vacate yourtenancy you should put just as much time intonegotiating and handing over your currentproperty as you are planning to spend on finding anew one

CostsWhen reviewing the cost to make good a tenancy thescope of works plays a very important part I f you cannegotiation down a scope of works early in the piecethe cost to make good can become a lot cheaper Thisnegotiation is often left out and the tenant is thensurprised (when it is too late) about how much itactual ly costs to transfer property and carry out amakegood

Make sure you have al l the necessary information infront of you including your makegood provider squotes and your landlord s settlement figure This wil lleave you in a much better position to decide how toproceed Settle and walk away or save money andcarry out the makegood yourself

An estimate of cost(Dependant on the grade of the space in question) atypical makegood could cost around $20000 for a1 50-300m2 tenancy $50000 for a 300-600m2tenancy or around $1 1 0000 for a 1 000m2+ tenancy

A settlement figure can be up to 40 more thanthe above figures so it is important to consideryour options

In conclusion

Money can be saved during handover of a leasedproperty by

- Good communication with your landlord

- Al lowing sufficient time to fol low a process ofagreeing a scope requesting a settlement figuredeciding on a makegood provider carrying out themakegood and handing over your property

At the end of the day you need to make a commercialdecision on whether to accept a settlement figure orcarry out the makegood

I f you do decide to carry out the makegood find acompany that special ises solely in makegoods

For more information please do not hesitate to contact me

Adam DAngelo - Managing Director

Makegoods Pty Ltd

1 300 625 346

Cl ick here to email us any queries

Cl ick here to start an onl ine quote now

Your lease is expiringAre you sure you wil l get your bond back