Unlike residential property, commercial real estate in South Australia has a unique set of laws and regulations that require careful attention.
Broadway Property is knowledgeable and experienced when it comes to understanding key considerations such as lease agreements to zoning laws, because it isn’t just about protecting your investment; it’s about avoiding costly disputes and ensuring your business can operate legally and successfully.
The most important document is the Memorandum of Lease
For tenants and landlords alike, the Memorandum of Lease is the foundation of the relationship. In South Australia, many commercial leases are governed by the Retail and Commercial Leases Act 1995 (SA), which provides protections for tenants, particularly in the retail sector.
Here’s what to pay close attention to:
- Rent reviews: How and when will the rent be reviewed? Leases can include fixed increases, Consumer Price Index (CPI) adjustments, or market reviews.
- Outgoings: The lease must clearly state what “outgoings” the tenant is responsible for (e.g., council rates, land tax, water rates, insurance).
- Permitted use: This clause defines what you can and cannot do on the property. It must align with your business operations and, importantly, the property’s zoning.
- Option to renew: A renewal option gives you the right to extend the lease for an agreed-upon term, providing security for your business. Make sure you understand the notice period for exercising this option.
Before you sign, it is essential to have a solicitor review the document. A vague clause can lead to significant financial and legal headaches down the track.
Zoning laws and permitted use
Zoning laws dictate how a piece of land can be used and are among the most critical factors for any commercial property. In South Australia, these rules are governed by the Planning, Development and Infrastructure Act 2016 (SA) and are managed by your local council.
Zoning specifies what types of businesses are allowed in a particular area. For example, a property zoned for “heavy industry” may prohibit a retail shop or café. If you purchase or lease a property without verifying its zoning, you could find the running of your business in the particular property or location could be illegal before you even open its doors.
Before you commit, it’s vital to:
- Check the zoning by obtaining a copy of the property’s zoning from the local council or online website.
- Confirm permitted use by confirming with the council that your specific business type is a permitted or “consented” use for that property.
- Seek advice from a town planner or property lawyer in relation to your intended use if necessary.
Broader property law in South Australia
Other considerations when purchasing commercial real estate in South Australia, include:
- Stamp Duty and Land Tax: In SA, stamp duty is not applicable on the purchase of commercial property. However, if you own a commercial property, you may be liable for annual land tax. These costs should be factored into your financial planning.
- GST: If you are buying a commercial property, you need to understand the Goods and Services Tax (GST) implications. This can be a complex area, and it’s best to seek advice.
- Conveyancing: The process of legally transferring property ownership is more complex for commercial properties than residential. A commercial property solicitor will handle a more extensive due diligence process, checking for things like easements, caveats, and other encumbrances that could affect the property’s use.
The Bottom Line
Legal due diligence is not an optional extra; it is a fundamental part of the commercial property process. Whether you are a first-time investor or an experienced business owner, the laws governing commercial property in South Australia are detailed. However, working with a trusted team of professionals, including Broadway Property, a commercial property solicitor who specialises in property law, is the smartest way to protect your interests and ensure a smooth, successful transaction.