Make Good Clause in Commercial Leases Explained: A QLD Guide for 2026

Imagine handing back the keys to your Brisbane office, expecting your bank guarantee to be returned, only to receive a bill for $30,000 to "strip out" the very partitions you installed five years ago. It is a stressful scenario that many Queensland business owners face, especially when the difference between "original condition" and "base building" is not clearly defined. You have worked hard to build your business, and the last thing you need is a legal dispute over floor tiles or ceiling grids as you are trying to transition to a new space. Having a make good clause commercial lease explained in plain English is the best way to protect your capital before you even sign a contract.

We understand that the end of a lease can feel like a financial minefield, but it doesn't have to be. This guide will help you understand your specific obligations under the Property Law Act 2023, ensuring you don't pay a cent more than necessary to satisfy your landlord. We will walk through the latest 2026 QLD legislative standards, the critical importance of a condition report, and how to negotiate a cash settlement that keeps your bank guarantee secure and your exit stress-free.

What is a Make Good Clause in a Commercial Lease?

At its simplest level, a make good clause is a contractual obligation within a lease agreement that requires a tenant to return the premises to a specific state at the end of their term. While it sounds straightforward, this section of your contract is often the most disputed. Landlords use these provisions to ensure they can re-let the space quickly without footing the bill for your specific renovations or customizations. For you as a tenant, it represents a potential end-of-lease liability that can reach tens of thousands of dollars if it's not managed correctly. Having a make good clause commercial lease explained clearly helps you understand that this isn't a penalty, but a commercial obligation you can plan for from day one.

A make good clause serves as the final bridge between your tenancy and the next, establishing a clear line where your responsibility ends and the property’s future begins.

The Core Purpose of Make Good Provisions

The primary goal is protecting the landlord's asset value over the long term. Commercial properties are dynamic; what works for a boutique marketing agency in Brisbane might not suit a medical clinic. By requiring you to remove fit-outs, the landlord maintains a blank canvas for the next occupant. These provisions provide certainty, ensuring both parties know what to expect when the keys are returned. It's vital to distinguish between three distinct tasks that often get lumped together:

• General cleaning and "broom clean" requirements.
• Repairing damage caused during the tenancy, such as holes in walls or stained carpets.
• The total removal of fit-outs, which might include partitions, custom lighting, or specialized plumbing.

Why "Standard" Clauses Can Be Dangerous

Many business owners mistakenly believe there's such a thing as a "standard" lease in Queensland. In reality, every contract is unique, and the myth of the standard agreement can lead to significant financial friction. Vague wording like "return to original condition" is a common trap. Does "original" mean how it looked when you moved in, or how it looked when the building was first constructed? Without precise language, you risk losing your bank guarantee over a simple misunderstanding. This is why having a specialist property lawyer review these terms before you sign is essential. A make good clause commercial lease explained by an expert moves the conversation from high-pressure guesswork to a clear, actionable plan that protects your capital.

Common Levels of Make Good Obligations Explained

Not all make good obligations carry the same financial weight. Understanding which specific level applies to your situation is the first step toward lowering the pressure of a business move. In Queensland, these requirements generally fall into three primary categories. When you have a make good clause commercial lease explained in the context of these levels, you can more accurately budget for your eventual exit. The length of your lease also plays a role; a ten-year tenancy naturally results in more structural aging than a three-year term, which can influence what a landlord considers "reasonable" restoration.

Level 1: Base Building (Bare Shell) Condition

This is the most intensive and expensive requirement. It involves stripping the premises back to a "bare shell," which means removing all partitions, floor coverings, and even ceilings that you installed. You are also responsible for returning services like air conditioning and fire sprinklers to their original open-plan configuration. This level is common in high-end Brisbane CBD office leases. According to research from early 2026, full make-good costs for this level of work typically range between $200 and $300 per square metre. For a 200-square-metre office, this represents a significant end-of-lease liability.

Level 2: Returning to Original Condition

Most commercial tenants find themselves at this middle tier. It requires you to remove your specific fit-out and any permitted alterations you made, but you leave the basic building structure intact. The success of your exit at this level depends entirely on your initial Condition Report. This document serves as the "source of truth" for what the premises looked like at the commencement date. Without a detailed report, you might find yourself paying to fix damage that existed long before you took possession of the keys.

Level 3: Redecoration and Basic Repair

This is the least intensive option and is frequently found in shorter-term retail or warehouse leases. The focus here is on aesthetic restoration rather than structural changes. You will typically be required to paint the walls, professionally clean the carpets, and ensure the space is "broom clean." It is a straightforward process designed to make the premises ready for immediate possession by the next tenant. For peace of mind during your transition, having an expert review your lease terms before you sign can help ensure you aren't over-committing to a level of restoration that doesn't fit your business needs.

Fair Wear and Tear vs. Damage: Navigating QLD Lease Disputes

The most common source of friction at the end of a tenancy is the debate over what constitutes "reasonable" aging versus actual damage. While you are responsible for returning the premises in a specific state, you shouldn't be held financially liable for the natural life cycle of the building materials. This is where the concept of fair wear and tear becomes vital. Having a make good clause commercial lease explained in the context of Queensland's unique environment helps you draw a firm line between your obligations and the landlord's maintenance responsibilities. If your lease doesn't explicitly exclude fair wear and tear from your make good requirements, you could unintentionally find yourself paying to "refresh" the property for the next tenant.

In Queensland, regional factors play a significant role in how property ages. For businesses on the Sunshine Coast or near the Brisbane River, salt air and high humidity can cause metal fixtures to tarnish or window seals to perish faster than in inland areas. These environmental impacts are typically considered fair wear and tear because they result from the property's location and ordinary use. We always recommend ensuring your lease specifically mentions these exclusions to avoid high-pressure negotiations when you are trying to exit.

Examples of Fair Wear and Tear

Fair wear and tear is the gradual deterioration that occurs even when a tenant takes good care of the property. Common examples include:

• Fading of paint, wallpaper, or carpets caused by exposure to the intense Queensland sun.
• Minor scuff marks on walls in high-traffic corridors or near doorways.
• The natural aging of plumbing washers or electrical switches through daily use.
• Thinning of carpet pile in areas where desks and chairs were situated.

What Constitutes Actual Damage?

Damage is distinct from aging because it usually results from a specific incident, neglect, or unauthorized changes. This is where landlords are most likely to claim against your bank guarantee. Examples include broken window glass, large holes in plasterboard from unapproved shelving, or deep gouges in timber flooring. Stains or burns on carpets that require a full replacement rather than a professional steam clean also fall into this category. If you've made structural changes without written consent, the cost of reversing those works will almost certainly be your responsibility.

The Retail Shop Leases Act 1994 (QLD)

If your business falls under the Retail Shop Leases Act 1994, you have additional layers of protection. This legislation often limits a landlord's ability to demand excessive refurbishments that go beyond standard make good requirements. For instance, a landlord cannot generally force a retail tenant to pay for a full shop fit-out refurbishment just because the lease is ending, unless specific criteria are met. If a dispute arises that you can't resolve through calm negotiation, the Queensland Small Business Commissioner (QSBC) provides mediation services for claims up to $750,000. For more complex legal disagreements, the Queensland Civil and Administrative Tribunal (QCAT) serves as the final authority to ensure both parties are treated fairly under the law.

Strategies for Negotiating Your Make Good Clause

Negotiation isn't a one-time event; it is a strategic process that begins before you sign the lease and concludes as you prepare to exit. By approaching this early, you can significantly lower the financial burden of your lease exit. Having a make good clause commercial lease explained as a negotiable commercial term rather than a fixed rule gives you the leverage to protect your business's cash flow. Accepting these terms without a professional review is a risk that can lead to unexpected litigation or the loss of your bank guarantee. Our goal is to move you from a state of uncertainty to a feeling of security by ensuring your obligations are clearly defined and capped.

The Condition Report: Your Best Defence

The most powerful tool in your arsenal is a comprehensive Entry Condition Report. This document should include high-resolution, time-stamped photographs of every corner of the premises, including existing scuffs, floor stains, and the state of the ceiling grid. It's essential to ensure the landlord or their agent signs off on this report to confirm its accuracy at the start of your tenancy. Without this mutual agreement, your photos may be dismissed during a high-pressure dispute at the end of your term. A detailed condition report prepared today saves you from a five-figure restoration bill tomorrow.

Cash Settlements in Lieu of Works

As your lease comes to an end, you might find that physically performing the make-good works is more stressful and expensive than it's worth. There is a growing trend in the Brisbane and Sunshine Coast markets toward negotiating a cash settlement. This involves paying the landlord a lump sum instead of hiring your own contractors to strip the space and repair the walls. This is often a win-win scenario; you gain cost certainty and avoid the logistics of managing trades, while the landlord receives immediate funds to renovate the space specifically for their next tenant’s requirements.

To ensure the settlement amount is fair, we recommend obtaining a report from a Quantity Surveyor to estimate the actual cost of works. This evidence-based approach removes the friction from the negotiation and provides a clear path to a clean break. If you're currently reviewing a new agreement, our team can provide a fixed-price lease review to ensure your make good clause commercial lease explained in the contract doesn't leave you with an unmanageable financial burden.

How RCB Law Protects Your Interests at Lease End

Moving business premises is a high-pressure transition that can feel overwhelming for even the most seasoned business owner. We understand that behind every commercial agreement is a person who wants to focus on their company's growth rather than legal friction. Our team at RCB Law approaches every lease with empathy, acting as a steady guide through what can often be a confusing and stressful process. With over 30 years of experience in Queensland property law, we provide the tactical advantage you need to ensure your exit is as smooth as your entry. From boutique retail spaces on the Sunshine Coast to high-rise corporate offices in Brisbane, our local expertise ensures you have the make good clause commercial lease explained with total clarity.

Pre-Lease Review and Drafting

The best way to lower the financial burden of a future exit is to address it before you even have the keys. We specialize in identifying "hidden" costs within proposed agreements that might not be obvious during initial negotiations. By drafting specific exclusions for fair wear and tear or capping restoration costs, we protect your business capital from day one. Our reviews ensure your contract complies with the Property Law Act 2023 (Qld), which replaced the previous 1974 Act on August 1, 2025. We offer fixed-price options for these reviews, providing you with cost certainty and reducing the anxiety often associated with professional legal services. Having a make good clause commercial lease explained by a specialist at the start of your tenancy ensures you aren't blindsided by costs years down the line.

Dispute Resolution and Exit Strategy

If you're already approaching the end of your term and facing unreasonable demands from a landlord, you don't have to face that pressure alone. We assist clients in negotiating fair outcomes, whether that involves arranging a cash settlement or disputing an inflated scope of works. Our primary focus is the recovery of your bank guarantee or security bond, ensuring it's not used as a leverage tool against you. We provide brief and direct assistance to resolve these conflicts quickly, aiming to avoid litigation and keep you out of the tribunal system. If you're feeling the weight of end-of-lease obligations, reach out to our team for a reassuring consultation on your commercial lease. We're here to remove the friction and help you move forward with confidence.

Secure Your Business Exit with Confidence

Protecting your capital during a lease transition requires a blend of early documentation and a clear understanding of your legal rights. By establishing a detailed condition report at the start of your tenancy and knowing the difference between fair wear and tear and actual damage, you remove the friction that often leads to end-of-lease disputes. Having a make good clause commercial lease explained in the context of the latest 2026 Queensland regulations ensures you aren't paying for building upgrades that fall outside your responsibility.

With over 30 years of Queensland property law expertise, our team provides the reassuring and professional guidance needed to handle even the most complex negotiations. Whether you're operating a boutique on the Sunshine Coast or a corporate office in Brisbane, we know the local market dynamics that influence landlord expectations. We're here to help you move forward with a clear strategy and total peace of mind. Speak with our specialist property lawyers about your lease today to ensure your next business move is a smooth and successful one.

Frequently Asked Questions

What happens if I don't complete the make good works by the lease expiry date?

If you fail to finish the works by the expiry date, you're technically in breach of your agreement. The landlord may charge you "holdover rent" or damages for the period they're unable to re-let the space due to the ongoing construction. They also have the right to hire their own contractors to finish the job and deduct those potentially higher costs directly from your bank guarantee.

Can a landlord force me to remove a fit-out that actually improves the property?

Yes, they can. Even if you've spent significant capital on high-quality partitions or lighting, the landlord might view an open-plan "blank canvas" as more marketable for the next tenant. If your make good clause commercial lease explained requires a return to "original condition," you're legally obligated to remove your improvements unless you obtain the landlord's written consent to leave them behind.

Is "fair wear and tear" always excluded from make good clauses in QLD?

Fair wear and tear isn't automatically excluded in every contract. While the Property Law Act 2023 (Qld) includes it in the schedule of implied terms, most commercial leases are specifically drafted to override these defaults. You must check that this exclusion is explicitly written into your lease to ensure you aren't held liable for the natural aging of the building materials over time.

How much does it typically cost to "make good" a commercial office?

For a full strip-out, you should budget between $200 and $300 per square metre based on early 2026 market data. This means a 150-square-metre office in Brisbane could face restoration costs of $30,000 to $45,000. These costs can vary significantly depending on whether you're simply painting and cleaning or performing a total base-building restoration.

Can the landlord use my bank guarantee to pay for make good works?

Yes, the landlord can draw on your bank guarantee if you fail to meet your obligations. This is the primary reason landlords require security at the start of a tenancy. If there's a dispute over the scope or quality of your restoration, they may hold the funds until a resolution is reached through mediation or the Queensland Small Business Commissioner.

What if the landlord plans to demolish the building right after I move out?

You may be able to avoid make good costs if the landlord intends to demolish or substantially redevelop the building. Legal precedents often prevent landlords from claiming for works that would be "wasteful" or provide no actual value. If the building is slated for demolition, we can help you negotiate a waiver to protect your business capital from unnecessary expenditure.

Do I need a Quantity Surveyor to determine make good costs?

While not a legal requirement, a Quantity Surveyor is an excellent asset during a cash settlement negotiation. They provide an independent, evidence-based estimate of what the restoration works should actually cost. This professional report removes the high-pressure guesswork from the conversation and gives you a solid foundation for a fair financial exit.

How far in advance should I start planning my make good works?

We recommend starting your planning process six to nine months before your lease expires. This timeframe allows you to review your make good clause commercial lease explained by a professional, gather contractor quotes, and decide if a cash settlement is a better option. Proactive planning is the most effective way to avoid the stress of a rushed, expensive exit.