Lease Terms

Make Good Clauses Explained: What Every Australian Commercial Tenant Should Know

Jarryd Young1 April 20266 min read

Most commercial tenants don't think much about their make good clause when they sign a lease. It's buried near the back, the language is dense, and when you're excited about getting into a new space, end-of-lease obligations are the last thing on your mind.

That changes fast when the lease ends.

I've seen this play out more times than I can count across all types of commercial properties and asset classes over 20 years in the industry. A tenant moves out, the landlord hands over a make good schedule, and suddenly there's a dispute about $50,000 worth of works the tenant either didn't know they owed or didn't budget for. It's one of the most common and most expensive lease disputes in Australian commercial property.

So here's what a make good clause actually means, what it typically covers, and what you can do to protect yourself.

What Is a Make Good Clause?

A make good provision in a commercial lease outlines what works a tenant is required to carry out when the lease ends and they hand back the premises. In plain English, it's the landlord saying: "When you leave, I want the space in this condition."

The specific obligations vary enormously from lease to lease. Some are narrow, some are extremely broad. A narrow make good might just require you to patch and paint. A broad one might require you to strip the entire tenancy back to a bare shell, remove every fixture and fitting you installed, and return the space exactly as it was when you took it.

That word "exactly" is where things get expensive.

What Does a Typical Make Good Clause Cover?

There's no standard make good clause in Australia. Each lease is negotiated (or not) independently, so what your clause covers depends entirely on what was agreed. That said, common make good obligations include:

Removal of fit-out. If you installed shelving, counters, partitions, ceiling panels, signage, or any other fixtures, you'll often be required to remove them all and restore the base structure. For a food and beverage tenancy, this can include commercial kitchen equipment, extraction canopies, grease trap infrastructure and associated plumbing, and any structural penetrations you made for ventilation.

Reinstatement of services. Any electrical, plumbing, data, or gas work you had done during the tenancy may need to be returned to its original state or capped off to code. If you ran new power to your equipment, someone needs to deal with that at the end.

Patching, painting, and cleaning. This is almost universal. The space needs to be in a clean, well-presented condition. Scuffed floors, damaged walls, broken tiles, and dirty surfaces are all typically your problem.

Removal of signage. External signage, window vinyl, fascia boards and pylon signage all need to come down, and any damage from their installation needs to be made good.

The honest answer to "what does your make good clause cover?" is: read your specific clause carefully, because the answer is in there and it might surprise you.

Why Make Good Gets Expensive

The cost of making good a commercial tenancy varies wildly depending on the size of the space, the extent of the fit-out, and how the lease was negotiated. For a small industrial unit with minimal fit-out, you might be looking at $5,000 to $15,000. For a food and beverage tenancy with a full commercial kitchen fit-out, I've seen make good costs reach well into six figures.

There are a few reasons the costs blow out.

First, you're not doing this work yourself. You need licensed tradespeople to remove and reinstate services safely and to code. A sparky to make good the electrical, a plumber for the drainage, a builder for anything structural. Those trades add up quickly.

Second, the condition the landlord expects the space returned to isn't always clearly defined upfront. If there's no agreed standard in the lease, disputes arise about what "original condition" actually means. Does the carpet need replacing? Does every paint scratch need attention? What if the HVAC system was already aging when you moved in?

This is where a condition report taken at the start of the lease becomes incredibly valuable. If you have photographic evidence of the state of the premises on day one, you can push back on claims that damage or wear predates your occupancy. Without it, the landlord's account of the original condition often wins.

Third, make good is typically the last thing a tenant deals with before vacating. You're stressed, you're moving, and you haven't budgeted for this. Suddenly you're scrambling to find trades and paying a premium for urgency.

How to Protect Yourself

The best time to understand your make good obligations is before you sign the lease, not when you're handing back the keys.

Get the clause defined clearly. Vague language in a make good clause is the landlord's friend, not yours. Push for specifics: what exactly needs to be removed, what standard does the reinstatement need to meet, and who decides if the works are adequate. The more specific the clause, the less room for dispute.

Negotiate a cap or a fixed sum. Rather than leaving make good as an open-ended obligation, you can negotiate a cap on the landlord's claim or agree upfront on a fixed make good payment at the end of the lease. This gives you cost certainty and removes the scope for an inflated claim.

Take a detailed condition report at commencement. Before you move a single piece of furniture in, photograph and document the state of every part of the premises. Walls, floors, ceilings, fixtures, services, external areas. Get both parties to sign it. This becomes your baseline and your best protection against end-of-lease disputes.

Consider the fit-out before you install it. Some fit-out elements are significantly more expensive to remove than to install. Commercial kitchen infrastructure is the obvious example. Before you commit to a substantial fit-out, factor the eventual make good cost into your business case. I've seen tenants spend $200,000 on a fit-out and then face $80,000 in make good at the end. That's part of the true cost of the lease.

Where Lease Intelligence Comes In

A lease summary report from Lease Intelligence extracts your make good clause and presents it clearly, alongside your other key obligations and critical dates. So instead of trying to interpret the legal language yourself at 11pm before you sign, you get a structured breakdown of exactly what you're committing to.

Knowing your make good obligations upfront changes how you plan. It changes how you budget the fit-out, how you document the premises at commencement, and how you prepare for lease end. You might still end up with a significant make good liability, but at least it won't be a surprise.

If you want to know exactly what your make good clause requires, a lease summary report from Lease Intelligence starts at $99. Head to leaseintelligence.com.au to upload your lease and get started.