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  1. #1
    Join Date
    May 2009

    Default Ideas to reach rental agreement

    I am currently in discussion with a landlord regarding moving premises (to a better site). The landlord is proposing a square metre rate which is a third more than what I am reliably informed that it should be.

    Can anyone offer ideas as to how we can help each other reach a compromise (this is mainly a retail site, and will be newly renovated)? We are prepared to pay a fair rent, and maybe even a premium if we are able to get some good ideas that the landlord might consider.

    I am thinking (and I'm unsure of tax implications) along the lines of landlord funding some of fitout, or guaranteeing rental, with no increases for a period of time. Is this realistic, or are there any other ideas?

    Thoughts please.

  2. #2
    Join Date
    May 2007


    Hi Dazza34,

    The landlord's building will be valued based on the rent. So he/she wants this to be as high as possible.

    Say you think rent should be $50k, and agreement is $60k, for 5 years.

    - If sign at $50k, might be worth say 7.5% yield so 666,667
    - at $60k , at 7.5% = 800,000

    So extra $10k worth $130k approx to landlord, and will cost tenant $10k*5.

    One option is for the landlord to pay your a lease incentive of $50,000, which would be taxable to you. Or even more as overall there is $80k upside from the $10k extra rent, so maybe you could get the $50k that it will cost you plus half the upside, so $90k incentive?

    Not sure where to start, book a free chat for 5-10 minutes https://cswaikato.co.nz/services-pro...s-hamilton/201
    Ross Barnett - Coombe Smith Property Accountants

  3. #3
    Join Date
    Jun 2004


    that sounds really unethical.
    Basically cranking up the rent.

  4. #4
    Join Date
    Jul 2011


    Quote Originally Posted by Wayne View Post
    that sounds really unethical.
    Basically cranking up the rent.
    Which is why you must do your homework before buying- pretty there is a case going thru some legal stuff now / soon in Tauranga over the same thing (Directors got a kick back for signing large leases, rent yield appear awesome but way out of line with market - not sure what purchaser was thinking)

  5. #5


    I'd say that valuers would be aware of case law surrounding this sort of headline vs effective rental scenarios.

    If a commercial property trades with an over the odds lease in place, what happens if that tenant leaves or it goes to a non racheted rent review? Not a happy spot for the purchaser.


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