Quick answer
Landlord's works are the jobs that get the premises ready for a tenant to fit out, such as base services, structure and shell. Tenant's works are everything you add to trade: partitions, joinery, fixtures, signage and equipment. The tenant usually pays for the fit-out, and in some retail leases can also be charged some or all of the landlord's works, so read the disclosure statement and agree any caps in writing before you sign.
Key points
- Landlord's works prepare the shell; tenant's works turn it into your business.
- Some retail leases pass landlord's works costs to the tenant, and the disclosure statement should say so.
- Under a NSW retail lease, a written cap on landlord's works is set before the lease starts, and that cap is the most the tenant can be billed.
- Shopping centres often impose a fit-out standard through a tenancy design guide that sets your minimum spend.
- Make good, refurbishment clauses and renewal conditions are future fit-out costs to budget for now.
Landlord’s works get a tenancy ready to be fitted out: the shell, the structure and the base services. Tenant’s works are everything you add so you can trade: walls, counters, joinery, lighting, signage and equipment. Tenants normally pay for their own fit-out, and some retail leases also pass on part or all of the landlord’s works. The split decides your real budget, so settle it before you sign.
Plenty of owners only discover the split when the first invoice arrives. By then, the lease is signed and the money is committed. This guide explains what each side typically covers, the protections that exist in some states, and how to fund the part that’s yours.
What’s the difference between landlord’s works and tenant’s works?
There’s no single national definition, and every lease draws the line a little differently. As a broad guide:
| Usually landlord’s works | Usually tenant’s works |
|---|---|
| Building shell, structure and roof | Internal partitions and ceilings within the tenancy |
| Base building services to the tenancy (power supply, water, sewer connection points) | Distribution of services inside the tenancy (power points, plumbing to sinks and basins) |
| Base air-conditioning or a capped connection | Extra air-conditioning for kitchens, server rooms or treatment rooms |
| Shopfront shell or opening | Shopfront glazing, signage and branding |
| Floor slab | Floor finishes |
| Base fire services | Changes to fire services caused by your layout |
In office leasing, you’ll often hear the base building standard described as “Category A” and the tenant’s work as “Category B”. Retail leases tend to talk about a “shell” or a “cold shell” versus a “warm shell”, which already has some services and finishes. The labels matter less than the schedule in your lease that lists exactly who does what.
Can the landlord charge you for its works?
In some retail leases, yes, and this is where tenants get caught.
Getting the shell ready isn’t always at the landlord’s expense. The NSW Small Business Commissioner’s guide on who pays for fit-outs notes that part or all of that preparation cost can be passed to you, and the disclosure statement has to flag it. The safeguard is a cap: a written figure for landlord’s works, settled before the lease starts, that you can’t be billed beyond.
Put another way, settle the preparation costs on paper before you sign, and go in knowing the full bill for getting from bare shell to open doors.
Rules differ between states and between retail and non-retail leases, so check with your solicitor and your state’s small business commissioner. But the practical lesson works everywhere: find out in writing what the landlord’s works will cost you, and get a cap.
What should you look for in the disclosure statement?
In Victoria, the Small Business Commission’s retail leases brochure for tenants says the landlord must give the disclosure statement and proposed lease at least 14 days before you enter into the lease, and that the statement should cover works, fit-out, refurbishment and alterations. It also advises budgeting for fit-out, moving and make-good costs.
When you read the disclosure statement, look for:
- The landlord’s works schedule, and whether you pay for any of it.
- Any maximum cost for landlord’s works charged to you.
- A tenancy fit-out guide or design standard, especially in shopping centres.
- Refurbishment or refit obligations during the lease or on renewal.
- Make-good requirements at the end of the lease.
- Outgoings that affect your monthly costs once you’re trading.
If something isn’t clear, ask before signing. After signing, your bargaining power drops sharply. It’s also worth asking your builder or shopfitter to walk the tenancy with the landlord’s works schedule in hand, so they can flag gaps between what the landlord is delivering and what your design assumes.
How do shopping centre fit-out guides affect your budget?
Centres tend to dictate how your shop must look, through a fit-out statement or design guide that might sit in the disclosure statement, the lease or a side agreement. Read it closely, because it also limits what can be asked of you: per the NSW Commissioner, work it doesn’t mention isn’t your obligation.
In practice, the guide often sets your minimum spend: approved materials for shopfronts, ceiling heights, lighting levels, signage rules and sometimes approved contractors. Get your fit-out designer to price the centre’s requirements before you agree the rent, because they can add materially to the cost.
What future fit-out costs hide in the lease?
Three clauses can trigger more spending later:
- Refurbishment clauses. According to the NSW Commissioner, a clause requiring a refurbishment or refit must state its general nature, extent and timing; without enough detail, it doesn’t apply.
- Renewal options. Exercising an option can come with a condition to refit the shop, entirely at your cost. Check that before you count on staying.
- Make-good. Expect to fund the strip-out yourself when you leave. It’s a cost that lands just as you’re paying for your next premises.
Knowing these upfront lets you fund your fit-out over a term that makes sense. If you’ve got a lease offer and want to know what a fit-out loan could look like, start a short enquiry. There’s no credit check at that first step.
How do you fund your share of the works?
Once you know your real number, including any landlord’s works you’re paying, the funding follows the same logic as any fit-out finance:
- Loose equipment such as ovens, fridges, salon basins and computers can often be financed against itself; see hospitality equipment finance for kitchens.
- Fixed work, including any landlord’s works charged to you, is usually funded on cash flow for an established business, typically $5k to $500k unsecured based on turnover and bank statements.
- New businesses or bigger projects often need property-secured business loans from $20k to $5m.
Keep the loan term comfortably inside the lease term, including any option you’re relying on.
Illustrative example
Illustrative only. A hair salon is taking a new tenancy in a neighbourhood shopping centre. The disclosure statement shows the landlord will deliver a shell with power and water to the boundary, but will charge the tenant for a new sewer connection point, capped at $18k in writing. The centre’s design guide requires a full-height glazed shopfront and specified lighting.
The salon’s designer prices everything: $18k for the capped landlord’s works, $115k for partitions, plumbing to the basins, joinery, shopfront and lighting, and $40k of basins, chairs and dryers. The owner negotiates a three-month rent-free period, funds the equipment separately and funds the $133k of fixed work and landlord’s works with an unsecured facility based on her existing salon’s two years of banked takings. Because she read the disclosure statement early, the only surprise was a pleasant one: the cap meant a costlier-than-expected sewer job stayed the landlord’s problem. Our salon fit-out finance page works through more hair and beauty examples, and the retail shop loans page covers shops more broadly.
Ready to fund your fit-out with no surprises?
Understanding the landlord’s works before you sign is the difference between a fit-out budget that holds and one that blows out in the first month. Once your share is clear, the funding is a straightforward next step.
The enquiry takes roughly 60 seconds, and there’s no credit check when you first enquire. We won’t send your details to a pile of lenders, so you won’t be chased by people you’ve never heard of. A real person looks at your lease, your quotes and your trading history, then calls you to talk it through. Please answer the form accurately, including your lease term and total fit-out cost, so we can match the right option first time.
Frequently asked questions
What are landlord's works?
They're the works that prepare a tenancy for the tenant's fit-out, typically the shell, structure and base services. What's included varies from lease to lease, so check the disclosure statement and the lease itself.
Can a landlord charge me for landlord's works?
In some retail leases, yes. The NSW Small Business Commissioner says the tenant may have to pay some or all of the landlord's costs of preparing the shop for fit-out, and the disclosure statement must say whether the tenant pays.
Is there a limit on what I pay for landlord's works?
For NSW retail leases there's a hard ceiling: a written figure settled before the lease starts, and nothing above it can be passed on to you. Other states, and leases that aren't retail, work differently.
When should I receive the disclosure statement?
In Victoria, the landlord must give you the disclosure statement and proposed lease at least 14 days before you enter the lease. Other states have their own timing rules, so check with your state's small business commissioner.
Do I have to do the fit-out the shopping centre asks for?
Most centres publish design requirements in a fit-out statement or design guide. The NSW Small Business Commissioner's position is that work falling outside that document isn't something the centre can make you do.
Who pays to remove the fit-out at the end of the lease?
Usually you. A typical make-good clause means stripping out what you installed and returning the space to its original condition. Budget for it from the start, because it arrives just as you're spending on your next premises.