Make-Good at End of Lease: What Commercial Tenants Should Inspect Before Handback

Make-good clauses in commercial leases vary widely, from "fair wear and tear" through to full strip-out back to base build. The dollar value attached to a poorly negotiated make-good can be eye-watering, sometimes equivalent to the original fit-out cost.

Smart tenants commission a pre-handback inspection three to six months before lease expiry, while there is still time to negotiate. The inspection compares the current condition against the original pre-lease condition report (you did get one of those, right?) and identifies what genuinely falls within the make-good obligation versus what is fair wear and tear.

Common negotiation outcomes include cash settlement in lieu of physical works (especially if the landlord has an incoming tenant who will refit anyway), partial make-good focused on regulatory items, and time extensions to allow phased works.

The pre-lease condition report is the strongest leverage in any make-good negotiation. Without it, the landlord effectively defines the baseline. With it, the tenant has a documented, signed reference point that pre-existing damage cannot be charged against.

If you are about to sign a new commercial lease, the time to commission a condition report is now, not when you are ready to leave.