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If you’re a property owner (or thinking of being one in the future), you might be wondering what can and cannot be done with your own property.
The truth is, there is a lot to consider when it comes to questions regarding property.
Matters such as the law, contracts, taxation and even local regulations determine what can be done on a certain premises and what is prohibited.
Having an understanding of the impact of these factors can help you make plans around them and be prepared.
A common question we get is, ‘Can I rent my own property to my business?’.
While the simple answer is yes, it’s not always entirely possible. There are certain requirements you need to meet to be able to rent out your own property to your business. Keep reading to learn more!
How To Rent Out Property
Generally, the process of renting out a property involves putting the property up for lease on the market. Not all property owners may choose to advertise their property on a public listing, and some may make private deals. The main purpose is to find a tenant that is willing to rent the property.
When a tenant is interested, they will usually inspect the property and ask for any details regarding it. If both parties are satisfied, then negotiations can begin.
When it comes to commercial leases, the negotiations are especially important as there is no legislative standard for a commercial property lease. Therefore, the agreement can be catered completely (as long as there’s nothing illegal) to suit the needs of the parties.
Commercial lease negotiations usually discuss matters such as:
- The amount of rent to be paid
- The usage of the property
- Fixtures and fittings
- Noise levels
- Operating hours
- Activities on the premises
- Subletting
- Licence requirements
- Length of the lease
- Incentives
- Dispute resolution process
Once the parties have agreed on everything, a contract is then drawn up, reviewed and signed by both parties.
Our lawyers at Sprintlaw are happy to review your commercial lease to ensure that the terms are not unfair to you.
Can I Rent My Own Property To My Business In Australia?
As a property owner who has their own business, it might be tempting to just rent your own property out to your business.
This answer to this isn’t quite that simple and depends on a number of factors. It requires some careful thought and consideration as personal property and business property can get mixed up if you decide to rent your own property. In turn, this will impact your statements when paying taxes and you don’t want to be in evasion of any tax laws.
In essence, it’ is possible to rent out your own property to you business if two things are in place:
- The property is held in a trust structure where you are the beneficiary
- The business in question is registered as a company
In this case, it can be possible to rent out your own property to your business. However, this is just a general principle. Whether or not this will be legally possible for you depends on your own individual circumstances.
We recommend seeking the help of a legal expert before taking any next steps.
Can I Run My Home Business From My Rental Property?
If you are renting a property, you might be questioning whether you can run your business from home.
The answer to this depends on two main factors:
- The contract you have with your landlord
- The local council regulations of your area
Firstly, it’s important to see if the contract you signed with your landlord permits you to run a business from home. Depending on the type of business as well as the size and scale of the activities, it might be a good idea to write to your landlord and seek permission. If they answer in the affirmative, be sure to get this in writing too.
Next, whether or not you can run a business from your rental property is impacted by local council regulations. It’s important to check the zoning of your property and see what activities are permitted based on that. You may also need to seek additional permission or approvals from the council as well.
The type of business and industry your business falls under will also impact your obligations in this regard. For example, if you are running an online clothing business, your regulations are likely going to be different to someone who is opening a food business from their rental property.
What Obligations Do I Have Under A Lease Agreement?
Regardless of if you are a tenant or a landlord, there are certain duties and responsibilities you need to abide by.
Firstly, ensure you understand and can fulfil your obligations according to the lease agreement. If you feel a certain term is putting you at risk, it may be time to have that contract reviewed and renegotiated.
Landlords have certain duties and responsibilities towards their tenants. For example, safety guarantees, repair and maintenance as well as communicating effectively with their tenants to make sure everyone is on the same page is key in being a good landlord.
For tenants, they also need to make sure they are being transparent with their landlord, keeping up their end of the contract and taking care of the property.
Commercial lease agreements are often for an extended period of time as it makes sense for businesses to stay in the location they are established in. In return, landlords are guaranteed a tenant during this time. As the relationship between the tenant and landlord is going to be a long one, it’s in everyone’s best interest to make sure it is a positive one.
A strong, clearly communicated lease agreement can help make sure this relationship runs smoothly. Potential misunderstanding and disputes can often be resolved by looking at the lease agreement,so it’s important to take the time to invest in a good one.
Should I Have My Lease Agreement Reviewed?
Yes, it’s always important to have your lease agreements checked out by a legal professional. Lease agreements can be tricky. You don’t want to get caught up in clauses or terms that disadvantage you later on.
In the context of running a business, it’s essential to have your lease reviewed in case the nature of your business activities is prohibited by the terms of the lease.
To make sure you are protected and the lease agreement works in your favour, get it reviewed by one of our legal experts.
Key Takeaways
Whether you are renting or being rented off, it’s important to make sure you’re well aware of your rights, duties and obligations on a rental property. When it comes to complex matters, it’s best to seek the help of a professional to avoid taking any missteps.
To summarise what we’ve discussed:
- The process of renting out a property involves seeking out a tenant, inspecting the property, negotiating the agreement and signing a contract
- There are limited circumstances where you can rent your own property to your business
- Check your lease agreement and council regulations to see if your ran run a business from your property
- Both landlords and tenants must follow their respective duties when it comes to property rental
- Having your lease agreement reviewed by a legal professional can aid in keeping your protected
If you would like a consultation on lease agreements, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
We'll get back to you within 1 business day.
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