Does commercial lease commission calculation include free months?

Discussion in 'Commercial Property' started by Baynite, 10th Jul, 2020.

Join Australia's most dynamic and respected property investment community
  1. Baynite

    Baynite New Member

    Joined:
    10th Jul, 2020
    Posts:
    2
    Location:
    Brisbane
    Hi

    I have just negotiated a commercial lease on a property which we own in Qld and gave the new tenant 3 months free rent as incentive.

    The agent's commission was agreed on a percentage of the 1st year's rent plus GST.

    My question is, would the commission be calculated on the full 1st year's rent or on that amount less the 3 months free rent?

    Thank you.
     
    Baynite, 10th Jul, 2020
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,927
    Location:
    Australia wide
    What's in your written agreement?
     
    Terry_w, 10th Jul, 2020
    #2
  3. Baynite

    Baynite New Member

    Joined:
    10th Jul, 2020
    Posts:
    2
    Location:
    Brisbane
    Thanks for your reply.

    I feel like a real idiot, I was looking in the T&Cs but then found it in the Scale of Fees, it reads "11.00% of 1st year's gross rental exclusive of any incentives but inclusive of GST."

    That answers my question, thank you.
     
    Baynite, 10th Jul, 2020
    #3
    Scott No Mates and Terry_w like this.
  4. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,225
    Location:
    Sydney or NSW or Australia
    @Baynite - that's generally the case with the letting fee, otherwise they're discounting their fee by 25%.
     
    Scott No Mates, 6th Oct, 2020
    #4
  5. Jmillar

    Jmillar Well-Known Member

    Joined:
    26th Jun, 2015
    Posts:
    679
    Location:
    Sydney
    This is standard. Incentives aren't taken into account when calculating leasing fees.
     
    Jmillar, 7th Oct, 2020
    #5