The Importance of Make Goods to NZ Commercial Leases

lease-agreementThe Importance of Make Goods in NZ Commercial Leases 

End-of-lease make goods are an important part of every commercial property lease contract. Below, we break down the fundamentals of make good clauses for New Zealand property landlords, explaining why it is essential for every end-of-lease contract to have one. We also reveal a range of high-quality end-to-end property make good services such as commercial refurbishment and cladding repairs

What is a Make Good? 

Used in commercial property leasing, a ‘make good’ requires a tenant to return the property to the original/agreed upon condition specified in their lease at the end of their leasing term. This often requires the reversal of any renovations made to the space during the tenant’s leasing period, as well as any repairs to damage that occurred to the property during the tenant’s term of lease. 

Why Make Goods are Important for Commercial Property Leases

Commercial leases need to have clearly identified make good clauses in place, as this ensures that end-of-lease obligations are understood and met by both parties. Without establishing a make good, complications around end-of-lease can rise, including costs, making it more difficult to re-let the premises.

At the start of a lease, the contract must keep note of the condition of the premises and landlord’s fittings and fixtures to minimise the chance of dispute at the end of the lease—however many years later that may be.

Most make good clauses are comprised of the following provisions, requiring the tenant to:

  • Remove any fixtures, fittings, and chattels they have put in place during their lease.
  • Repair any damage done to the property during their lease.
  • Restore the premises to the original condition it was in at the commencement of the lease/the agreed-upon condition specified in the lease.

End-of-lease obligations are often critical, potentially requiring large sums of money. Therefore, it is important that make goods are coherent and detailed, and that both parties’ obligations are clearly distinguished. 

For example, in the default provisions laid out by the Property Law Act 2007 (PLA), (Section 266 (1)), tenants can remove any affixed trade, ornament, or agricultural fixture that they placed in any leased premises “during a reasonable period” after the contract has legally ceased. If provisions such as these aren’t specified in the contract, identifying each parties’ obligations at the end of a lease can be complicated, and make it more difficult for the landlord to re-let the premises.

Once a commercial lease has begun, both parties should keep the end date and their obligations in mind, and budget accordingly.  

How the team of VSB Property can help you 

For those whose end-of-lease make good obligations are coming up, the team at VSB Property specialise in commercial property maintenance and refurbishment.

With over 10 years of experience in the industry, we offer a range of end-of-lease make good services, including strip outs, back-to-base build services, and office refurbishments. We work alongside asset managers, building owners, commercial property management companies, dilapidation consultants, and outgoing tenants as well.

Our team delivers a premium end-to-end property maintenance and refurbishment service and can handle all council approvals and consents that may be required for your project. Services may include but are not limited to:

  • General building renovations (including electrical, plumbing, and data).
  • Full-scale renovations
  • Site cleaning
  • Cladding repairs
  • Painting projects
  • Concrete repairs
  • Roofing repairs
  • Office refurbishment
  • Building of firewalls to meet Council regulations
  • Removal of partitions, floor coverings, racking, ceilings, and walls, and so on
  • Removal of mechanical and electrical systems including lighting, cables, cable trays, ventilation, heating, and air conditioning systems
  • Disconnection and removal of utilities-gas, electricity, water, and telecommunications

Our team can take your refurbishment projects from conception all the way through to completion. Get in touch with the team today to discuss your project needs.