End of Lease Make Good Sydney The Mistakes That Cost Tenants Thousands
Most tenants read their lease once at signing. The make-good clause is usually buried somewhere around page 47. By the time it matters, it is too late to negotiate it.
That is the problem. Make-good obligations in commercial leases can run to tens of thousands of dollars in required works. And if those works are not completed to the landlord’s satisfaction before the lease expires, the bank guarantee is at risk. In Sydney, commercial bank guarantees are typically set at three to six months of gross rent. For a mid-size office tenancy, that is a six-figure sum the landlord can draw on without going to court.
This article covers what your make-good clause actually requires, what a schedule of dilapidations is and how to respond to one, the five mistakes that consistently cost Sydney tenants money, and how to manage the final inspection without it turning into a dispute.
Key Takeaways
- There are five common make-good clause types in Sydney commercial leases. Each requires something different. Knowing which one you have changes everything.
- “At landlord’s election” is the riskiest clause language. It gives the landlord the choice between requiring works or claiming a cash equivalent and often at an inflated figure.
- A schedule of dilapidations must be responded to in writing, item by item, within the timeframe in your lease. Silence is not a defence.
- Not having a condition report from lease commencement is the single most damaging mistake a tenant can make. Without it, you cannot contest what was pre-existing.
- Allow a minimum of 6 to 8 weeks from lease expiry to start make-good works. Most tenants underestimate the time required.
- Verbal agreements with property managers are not binding. Everything must be confirmed in writing by an authorised representative of the landlord.
How to Read Your Commercial Make-Good Clause
Not all make-good clauses require the same thing. There are five common types used in Sydney commercial leases. The type you have determines the scope of work, the standard required, and your exposure if you get it wrong.
1. Return to Original Condition
The most onerous type. You are required to restore the premises to the exact condition they were in at lease commencement — every partition removed, every finish reinstated, every alteration reversed. A detailed condition report and photos from day one of the lease are essential for this clause type. Without them, you have no reference point and the landlord’s version of “original condition” becomes the only version.
2. Back to Base Building
Requires the tenant to remove all fitout and restore the space to the base building specification — as it was when the building was originally completed by the developer. This is different from “original condition” if the tenancy had a prior fitout in place when you moved in. Check the base building drawings carefully. Items from the previous tenant’s fitout that you inherited may or may not be yours to remove.
3. Strip-Out Only
Remove the tenant’s fitout. No requirement to reinstate finishes or restore to any particular standard. This is the most favourable clause type for tenants. But “strip-out” still needs to be interpreted against the base building drawings — removing something that was already there is still a breach.
4. Make Good at Landlord’s Election
The most commercially dangerous clause type. The landlord has the right to choose whether to require the tenant to physically complete the make-good works, or to accept a cash payment equivalent to the estimated cost of those works. Landlords regularly elect the cash option and claim amounts that exceed what the actual work would have cost. If your lease contains this language, get legal advice before your lease expiry date — not after.
5. Make Good as Agreed
Works are defined in a schedule agreed between the landlord and tenant, either at commencement or during the lease term. The clearest and most protective option for tenants — provided the agreed scope is thorough and documented properly. If the schedule is vague, it creates the same problems as any other clause type.
Red Flag Language to Watch For
- “At landlord’s election”: As described above, this removes your ability to control the outcome.
- “Fair presentation”: An undefined standard. Landlords interpret it broadly. Ask your solicitor to define it before you rely on it.
- “Reasonable condition”: Similarly undefined. What is reasonable to a tenant and what is reasonable to a landlord are rarely the same thing.
If your clause is ambiguous, specific questions to raise with a solicitor include: does this clause apply to items that were in the tenancy before my lease commenced, who determines what the “base building” standard means, and does my maintenance obligation differ from my make-good obligation under this lease?
For the physical execution of defit and make-good works, including services isolation, strip-out sequencing, and close-out documentation, see our guide to professional office and shop defits in Sydney.
What a Schedule of Dilapidations Is and How to Handle It
A schedule of dilapidations is a formal document prepared by the landlord or their building consultant — typically a quantity surveyor or property consultant — that lists alleged breaches of the tenant’s maintenance and make-good obligations under the lease. It is the landlord’s itemised claim.
When to Request It
Do not wait for the landlord to send it. Request the schedule 6 to 12 months before your lease expiry date. This gives you enough time to review it, gather evidence for items you intend to dispute, obtain quotes for items you accept, and programme the works. Tenants who receive a schedule four weeks before expiry have almost no room to move.
How to Review It
Cross-reference every item in the schedule against two documents: your lease commencement condition report and the base building drawings. These are your primary evidence sources. For each item claimed, ask: was this condition pre-existing at lease commencement, is this item part of the base building or part of my fitout, and does my lease actually require me to address this?
How to Respond
Always respond in writing within the timeframe specified in your lease. Go through the schedule item by item. For each item, either accept it and confirm your intention to address it, or formally dispute it with the specific evidence supporting your position. A blanket “we dispute the schedule” without item-by-item responses is not sufficient and may be treated as non-response.
What Landlords Sometimes Add
It is not unusual for a schedule to include items that were pre-existing at commencement, items that constitute fair wear and tear, or maintenance items that are arguably the landlord’s responsibility under the lease. Check each one. Not everything on the schedule is necessarily your obligation.
Five Mistakes That Consistently Cost Sydney Tenants Money
Mistake 1: Assuming Fair Wear and Tear Covers More Than It Does
Fair wear and tear in a commercial lease covers gradual deterioration from ordinary, intended use over the lease term. It does not cover damage, neglect, alterations, or deterioration caused by anything beyond normal occupation. Carpet worn down by foot traffic over five years: likely fair wear and tear. Carpet damaged by a furniture move: not covered. Wall marks from a whiteboard mounted without proper backing: not covered. Landlords know where the line is. Many tenants don’t, and they accept liability for items they could have successfully disputed.
Mistake 2: No Condition Report from Lease Commencement
Without a condition report documenting the state of the premises at lease start, you have no evidence for disputes about what was pre-existing. If the landlord claims the kitchen benchtop was damaged during your tenancy and you have no photos from day one, you cannot prove it was already like that. This is the single most consequential oversight in make-good disputes. If your lease has already started and you don’t have one, photograph and document everything now while you still have the opportunity.
Mistake 3: Starting Too Late
Four weeks before lease expiry is not enough time. Strip-out takes 1 to 3 working days, patch and paint takes 2 to 5 days, carpet takes 1 to 2 days, final clean takes 1 day. That is potentially two working weeks for the works alone. Then add landlord inspection notice time (typically 5 to 10 business days), plus the possibility of a re-inspection if defects are found. You can be looking at 6 to 8 weeks from go to completion. Starting late almost always produces holdover rent exposure. And holdover in a Sydney commercial lease activates at 150% of base rent.
Mistake 4: Ignoring the Base Building Drawings
Tenants regularly remove items during a defit that they believe are part of their fitout — but are actually base building. Lighting grids, certain mechanical components, structural partitions, base building data cabling. Removing these items creates a reinstatement obligation that is typically expensive to rectify. Obtain the base building drawings from your landlord or building manager and check them against your fitout plans before any work starts. If you never received base building drawings, request them now.
Mistake 5: Trusting Verbal Agreements with Property Managers
Property managers are not always authorised to make binding commitments on behalf of the landlord entity. “The property manager said we don’t need to do the kitchen” is not a defence when the landlord’s solicitor issues a claim. Every agreement, concession, or variation to make-good scope must be in writing, signed by an authorised representative of the landlord, and retained. If a property manager tells you something verbally, follow up with a written email confirming what was said and ask them to confirm it in writing. If they won’t confirm it in writing, assume it doesn’t exist.
Working Backwards from Your Lease Expiry Date
Make-good always takes longer than tenants expect. Here is a realistic timeline for a standard Sydney commercial office tenancy of 300 to 500 square metres:
| Make-Good Task | Realistic Duration |
|---|---|
| Strip-out of tenant fitout | 1 to 3 working days |
| Patching and painting | 2 to 5 working days |
| Carpet replacement (if required) | 1 to 2 working days |
| Final commercial clean | 1 working day |
| Landlord inspection notice period | 5 to 10 business days |
| Re-inspection (if defects found) | Add 1 to 2 weeks |
| Minimum total buffer from expiry | 6 weeks (8 weeks if scope is uncertain) |
Work backwards from your lease expiry date. If expiry is 30 June, make-good works should start no later than mid-May for a standard scope. If the scope is unclear or a schedule of dilapidations has not yet been received and agreed, start in early May.
If this timeline is not met, holdover rent activates at 150% of base rent. The daily financial cost of a delayed make-good — and how to calculate your specific exposure — is covered in our guide to commercial defit costs and holdover rent in Sydney.
Handling the Final Inspection and Managing Disputes
What to Prepare Before the Inspection
Prepare a complete documentation pack before the landlord’s representative arrives. This should include photographs of all completed works, contractor invoices and sign-off records, any required services isolation certificates, and as-built drawings if the scope included services work. This is your evidence file. If a dispute arises, these documents are what you rely on.
How to Present the Site
Present the tenancy in the same order the schedule of dilapidations listed items. Walk through it methodically with the landlord’s representative. For each item they flagged, show the completed work or the evidence that the item was pre-existing or not your obligation. A structured walkthrough is harder to dispute than a general impression.
What to Contest and How
If the landlord’s representative raises items at inspection that you dispute, do not agree verbally. Take notes. After the inspection, respond in writing with your position on each disputed item, the specific lease clause you are relying on, and the supporting evidence. Evidence that supports a successful contest includes lease commencement condition report photos, base building drawings confirming an item is base building not fitout, and the lease clause itself where the obligation claimed is not actually in the document.
The NCAT Pathway
For retail leases under the NSW Retail Leases Act 1994, unresolved disputes can be referred to the NSW Civil and Administrative Tribunal (NCAT). The process involves lodging an application, attending mediation, and if not resolved, a formal hearing. For non-retail commercial leases, disputes typically proceed through the courts depending on the amount in dispute. In both cases, engage a commercial property solicitor before taking any formal steps. The cost of getting the process wrong can exceed the cost of the original dispute.
What Landlords Cannot Claim
Even where a breach exists, a landlord’s recovery is not uncapped. Claims are typically limited to the reasonable cost of rectification and any proven financial loss directly caused by the breach. Landlords cannot claim betterment, meaning they cannot require you to fund an upgrade to a higher standard than what existed before your tenancy. They also cannot claim for loss of rent during a rectification period unless the lease specifically provides for it. Knowing these limits matters when evaluating whether to accept a claim or contest it.
Not Sure What Your Make-Good Clause Actually Requires?
Our team can review your lease scope, walk through the dilapidations schedule with you, and give you a clear picture of what the make-good work involves, how long it will take, and what it will cost. Get ahead of your expiry date before the timeline gets tight.
Request a Lease and Dilapidation Review ConsultationFrequently Asked Questions
Disclaimer: The information in this article is based on research and the professional experience of the Get It Away Demolition and Excavations team. Nothing in this article constitutes legal advice. Make-good obligations vary significantly between individual leases, building types, and commercial arrangements. For advice specific to your lease, engage a qualified commercial property solicitor. Cost figures reflect general Sydney market conditions as of 2025 and will vary based on tenancy size, scope, and contractor pricing.