You found the space. The landlord is friendly. The monthly rent feels manageable.
Stop. Before you sign anything, there are five things you need to understand — because commercial leases are not like renting a flat, and the standard lease agreement is written entirely in the landlord’s favour.
What You’re Actually Signing
A commercial lease is a legally binding financial commitment — usually for three to five years. Break it, and you can be held liable for every month of rent remaining on the contract.
That’s not a threat. It’s the standard clause.
The landlord doesn’t need to re-let the space before they come after you. They can chase the full remaining value while the space sits empty and you’re running your business somewhere else.
We’ve seen business owners held personally liable for over R600,000 because the clause was in the lease, they didn’t read it, and nobody told them it was negotiable.
The Real Question
Here’s what we see all the time.
A business owner signs a lease for R22,000 a month — with 10% annual escalations — on a five-year term. They do the maths on what they can afford today. They don’t do the maths on year five.
By year five, that R22,000 has become R32,242 a month. The business has grown, but so has the cost. And the landlord included a clause requiring six months’ written notice to exit — which the business owner didn’t see, didn’t query, and didn’t negotiate.
They want to move. They can’t. Not without six months’ notice and penalties.
The space that felt like a win in month one became a weight around the business by year four.
Five Things to Check Before You Sign
- Is the rent VAT inclusive or exclusive?
R22,000 exclusive of VAT is actually R25,300 a month. That’s R39,600 more per year. Over five years with escalations, the difference is significant — and it won’t be obvious from the headline number.
- What does the escalation actually cost you?
Run the numbers to year five before you sign year one. A 10% escalation on R22,000 means you’re paying R32,242 by the final year. Budget for the end of the lease, not the beginning.
- Are you signing personal surety?
This is the clause that follows you home. If the business can’t pay, this clause means the landlord comes after you personally — your savings, your assets. It’s often buried in the lease and framed as standard. It’s negotiable. Push back.
- What are the exit terms?
Can you sub-let? Can you sell the lease with your business? What notice period is required? If there’s no exit flexibility and the business changes direction, you could be trapped paying rent on a space you no longer need.
- Who is responsible for maintenance?
A commercial HVAC system replacement can cost R80,000 or more. Know upfront who carries that cost — you or the landlord. It should be in the lease. If it isn’t, that’s a gap that will cost someone money.
The Mindset Shift
Most business owners walk into lease negotiations worried about seeming difficult. They accept the first offer because the landlord seems reasonable and they don’t want to rock the boat.
Flip it around.
Vacant space costs landlords money. Every month without a tenant is revenue they’re not earning. You have leverage — especially if the space has been sitting. Use it. Ask for a lower escalation. Push back on personal surety. Request an early exit clause. The landlord can say no. But they can also say yes, and you’ll never know unless you ask.
The worst outcome of negotiating is you end up where you started. The worst outcome of not negotiating is you’re stuck in a lease that’s slowly strangling your business.
Keep It Simple
- Always calculate what you’ll pay in year five — not just year one
- Check whether rent is VAT inclusive before comparing spaces
- Personal surety is negotiable — don’t accept it as standard
- Build exit flexibility in before you need it
- Get your accountant and a lawyer to review before you sign
A good lease helps your business grow. A bad one makes sure it doesn’t. The hour you spend reviewing it now is cheaper than the years you’ll spend stuck in it.
General information only — chat to your accountant about your specific situation.