The Deed of Lease Seventh Edition 2024: A Beginner’s Guide

The Seventh Edition of the Law Association’s Deed of Lease template was released on the 24^th of November 2024, and replaces the Sixth Edition which, subject to some minor adjustments, had been standard since 2012. The new edition may be considered an early Christmas gift to some, but is it really out with the old and in with the new? Here’s a summary of the key changes to help you navigate the Seventh Edition Deed of Lease.

• Renewals Notice Period: The Seventh Edition allows parties to agree a renewal notice period that is longer or shorter than the former three months.  This allows flexibility for leases of different lengths and can account for time required to make good prior to termination.  
• Rent Reviews: Rent Reviews now include more options for types of reviews (including fixed rent adjustment, as well as the standard CPI and market reviews), and expands the ratchet options, to include both hard, soft and custom options (e.g. rent must not be less than the previously payable rent, or the rent payable at commencement).
• Outgoings: The new edition also expands on the outgoings that may be charged, e.g. by including exterior and fencing repainting charges, accessway maintenance and minor repairs to external areas, reasonable management administration expenses for body corporates, and so on. There are also stricter requirements on the charging of outgoings, with landlords now being obliged to provide an annual budget of outgoings to tenants.
• Insurance: The new edition allows for parties to specify the insurance excess amount, and the default insurance excess has increased to $5,000 from the former $2,000 under the Sixth Edition. If an act or omission on the part of the tenant causes damage that exceeds the excess amount, the tenant is liable to pay the landlord.
• Health and Safety Obligations: Health and safety obligations are now explicitly imposed on all parties to the lease.
• Seismic Ratings: One major motivation for redrafting the Deed of Lease was the ongoing impacts of earthquakes on commercial infrastructure, and there is now a space to detail the building’s seismic rating. While the new edition does not penalise landlords for not specifying the seismic rating, it is a great prompt to discuss these matters.
• Bank Guarantees and Rental Bonds: The Seventh Edition now explicitly allows for bank guarantees and rental bonds to be provided as security against default.
• No access rent adjustments: Although the previous edition did provide for rental abatement where tenants are unable to access the property, the abatement was limited to being a “fair proportion”, which was often hard to assess. In the new edition, the parties can explicitly agree on a reduction percentage, and either party can call for that percentage to be reviewed in the context of a particular emergency.
• Tenants Fixtures and Fittings: Schedule 6 of the new edition now includes a dedicated space to list the tenant’s fixtures and fittings.

Overall, The Law Association’s new Seventh Editon Deed of Lease continues to aim to balance tenant and landlord responsibilities by expanding on the options available to both parties.  There is a lot of new content in a new edition, and although not everything will always be relevant, it is a great jumping off point for negotiations between the parties.

If you have any questions about the Seventh Edition Deed of Lease, please feel free to get in touch with our friendly property team.