4 min read
Quick Summary
- START EARLY: Review your options 6–12 months before expiry.
- TWO DECISIONS: First decide stay or move. Then decide lease or buy.
- STAY AND LEASE: Renew with strong negotiation if premises and rent still work.
- STAY AND BUY: Purchase the building you occupy and build equity.
- GET ORGANISED: Commercial finance can take 3–6 months, so start early.
Why The Lease Expiry Moment Matters
The lease expiry conversation starts too late for most business owners.
By the final six months, the landlord knows you need an answer, staff want certainty, and relocating may no longer be practical. That is a weak place to negotiate from.
As expiry gets closer, your choices can narrow fast:
- Rent reviews may lift occupancy costs.
- An option to renew may have a strict exercise deadline.
- Make-good work may be required before you leave.
- Commercial finance can take 3–6 months from preparation to settlement.
In precincts like Welshpool, Kewdale, Wangara and Osborne Park, location is often tied directly to customers, freight access and staff convenience.
First Decision: Stay Or Move?
Start with location, not finance. Does the current premises still work for the business?
STAY may be right when:
- The location still works for customers, suppliers and staff.
- The current fit-out still suits operations.
- The premises can handle expected growth.
- The landlord is offering reasonable renewal terms.
MOVE may be right when:
- The space is too small, too large or wrongly configured.
- Access, parking or freight constraints are hurting the business.
- Customers or staff would be better served elsewhere.
- Rent is materially above what the market offers.
Second Decision: Lease Or Buy?
Once you know where the business should be, decide how to occupy it.
LEASE may be right when:
- Flexibility matters more than ownership.
- Capital is better spent on the business itself.
- The business direction could change within a few years.
- You want the landlord to carry maintenance and capex.
BUY may be right when:
- Security of tenure matters.
- You want to build equity instead of paying a landlord.
- The premises are central to long-term operations.
- You have the capital and appetite for ownership risk.
The Four Paths In Practice
STAY AND LEASE: The simplest path. Exercise renewal options in writing before deadlines, then negotiate terms carefully — longer terms, rent review caps, fit-out allowances and sublease flexibility. A solicitor should confirm the process.
STAY AND BUY: Turn lease expiry into an ownership decision. Lenders assess both the property and the business — value, loan-to-value ratio, revenue, profitability and existing debt. If the business occupies the building, lenders may test the deal with a market-rent or lease-back style assessment. Budget for stamp duty, legal fees, valuation, lender fees and repairs, not just the deposit. See commercial property loans.
MOVE AND LEASE: Relocation can solve space and access problems but gets expensive quickly. True costs include make-good on the old premises, legal fees, new fit-out, moving equipment and inventory, and overlapping rent. Budget with a contingency. Asset finance can preserve cash if new equipment is part of the move.
MOVE AND BUY: The highest-commitment path. Same lender tests as stay-and-buy, plus the pressure of coordinating a purchase while running a business. Give yourself the longest runway — this path easily takes 6–12 months.
The Timeline: Start Six To Twelve Months Out
STEP 1: PREPARE THE FINANCE FILE
- Recent financial statements and tax returns.
- Current profit and loss and balance sheet information.
- Business and personal asset and liability statements.
- Signed lease schedules where relevant.
- Recent entity statements.
STEP 2: NEGOTIATE FROM A POSITION OF CHOICE
Negotiate before deadlines force your hand. Your best leverage comes from having a credible alternative.
Risks And Transparency
Key risks and trade-offs include:
- Make-good costs may still apply if you relocate.
- Stamp duty and transaction costs can be substantial.
- Interest rates may rise, increasing repayments.
- Property values can fall.
- Relocating can disrupt customers, staff and operations.
Buying ties up capital and reduces flexibility; moving disrupts operations; staying can lock you into premises that no longer fit.
Do not rush the decision just because the lease deadline is looming.
Terms To Know
- Lease expiry: The date the agreed lease term ends.
- Make-good obligation: The tenant’s duty to return the premises to an agreed condition.
- Owner-occupier loan: Commercial property finance for a business using the property for its own operations.
- Option term: An additional lease period the tenant may be entitled to take up under the lease.
The Baseline Difference
A lease expiry is rarely just a paperwork issue. It is a funding, property and business strategy decision rolled into one.
At Baseline Finance, we help clients weigh the real costs, risks and timing across staying, relocating or buying. Then we manage the finance process clearly and without the usual lender run-around.
Contact Baseline Finance
Phone: 08 6108 3925
Email: commercial@baselinefin.com.au
This article is general information only and does not constitute legal, accounting or personal credit advice. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates are subject to change. Approved applicants only.
