Commercial Lease Expired in Queensland: Can the Tenant Stay on a Holding Over Basis?

The Lease Has Expired — But the Tenant Is Still Trading

A commercial lease reaches its expiry date.

The tenant keeps operating from the premises.

Rent continues to be paid.

The landlord continues accepting the rent.

But nobody has signed a new lease.

What is the legal position?

Many landlords and tenants assume that the old lease simply “continues” automatically.

That is not necessarily correct.

After a fixed-term commercial lease expires, the legal relationship will depend on the wording of the original lease, the conduct of the parties and whether they have agreed—expressly or impliedly—to a new period of occupation.

In Queensland, the Property Law Act 2023, which commenced on 1 August 2025, now contains specific provisions dealing with leases terminable at will and periodic tenancies.

The first step is therefore:

Check the holding over clause in the lease before assuming what happens next.

What Does “Holding Over” Mean?

“Holding over” generally describes the situation where a tenant remains in possession of leased premises after the fixed lease term has expired.

A typical commercial lease might say that if the tenant remains in occupation with the landlord’s consent after expiry, the tenancy continues:

• month to month;
• on the same terms as the expired lease, so far as applicable;
• at a specified higher rent; and
• subject to termination by either party on a stated period of notice.

The exact wording varies significantly between leases.

For example, one lease might say:

the tenant holds over as a monthly tenant terminable on one month’s notice.

Another might provide:

the tenant occupies as a tenant at will, terminable on 30 days’ notice.

Those clauses can produce different legal consequences.

Does the Original Fixed-Term Lease Automatically Renew?

Generally, no.

If a five-year lease expires, continued occupation does not automatically create another five-year term.

Instead, the parties may have:

• entered into a new periodic tenancy;
• continued under an express holding over clause;
• created a lease terminable at will; or
• reached some other express or implied arrangement.

The legal character of the occupation matters because it affects how much notice may be required to end it.

Queensland Now Has a Specific Rule for a Lease Terminable at Will

Under section 172 of the Property Law Act 2023, a lease can be a lease terminable at will where the tenant remains in possession with the landlord’s consent after the lease term has ended and the parties have not agreed, expressly or impliedly, that the tenant may remain for another specified period.

Section 174 then provides that either party may terminate such a lease by giving a termination notice at least:

20 business days before the termination date

The termination notice must identify the land, state the termination date and be signed by the party giving it.

This is a significant practical rule for commercial landlords and tenants whose fixed lease has expired but who have never clearly agreed on what happens next.

What If the Parties Have Created a Monthly Tenancy?

A different rule applies where the arrangement is properly characterised as a periodic tenancy.

For a monthly tenancy, section 175 of the Property Law Act 2023 generally requires at least:

1 month’s termination notice

and the termination date must be the last day of a period of the tenancy.

For example:

If rent is payable monthly and the parties have agreed that the tenant may continue on a month-to-month basis, the arrangement may be treated differently from a simple tenancy terminable at will.

The distinction can therefore matter.

However, these statutory rules operate subject to contrary agreement in relevant circumstances, so the wording of the original lease and any subsequent agreement remains critical.

Example: The Five-Year Lease That Expired Six Months Ago

Suppose a tenant operates a professional office in Brisbane.

The lease was:

Term: 5 years
Expiry: 31 January 2026

The tenant remains after expiry.

Each month:

• the landlord issues a rent invoice;
• the tenant pays it;
• the landlord accepts payment;
• both parties discuss a possible new lease;
• no renewal document is signed.

By August, negotiations break down and the landlord wants the premises back.

The landlord should not simply assume:

“The lease expired six months ago, so the tenant must leave tomorrow.”

Likewise, the tenant should not assume:

“The landlord accepted rent, so I now have another long-term lease.”

The legal position should be determined by reviewing:

1. the original holding over clause;
2. correspondence after expiry;
3. rent payment arrangements;
4. whether a new term was expressly or impliedly agreed;
5. whether the arrangement is periodic or terminable at will; and
6. the statutory notice requirements.

Why the Holding Over Clause Matters So Much

Commercial leases often contain detailed holding over provisions.

A clause may specify:

• whether occupation is monthly;
• how either party can terminate;
• how much notice is required;
• whether rent increases;
• whether previous lease conditions continue;
• whether guarantees continue;
• whether the landlord can require vacant possession quickly; and
• how make-good obligations operate.

This means the Property Law Act should not be read in isolation.

The lease remains the primary document for determining the commercial arrangement between the parties.

Can Rent Increase During Holding Over?

Often, yes—if the lease provides for it.

Some commercial leases state that during holding over, rent becomes:

• the rent payable immediately before expiry;
• the previous rent plus a stated percentage;
• market rent;
• a specified premium such as 110% or 125% of the previous rent.

There is no universal holding-over rental rate applying to every Queensland commercial tenancy.

Landlords should therefore check the clause before issuing invoices, and tenants should check whether the increased amount has actually been calculated in accordance with the lease.

Do the Old Lease Terms Still Apply?

Usually, a holding over clause will state that the provisions of the expired lease continue to apply so far as they are capable of applying.

That can potentially preserve obligations relating to:

• rent;
• outgoings;
• repairs;
• insurance;
• permitted use;
• access;
• indemnities;
• maintenance;
• default;
• make good; and
• other operational obligations.

However, provisions that are inherently tied to the original fixed term may require closer analysis.

For example, an option to renew that has already expired does not simply regenerate because the tenant is holding over.

Similarly, a lease incentive linked to the original term may have separate consequences.

What Happens to a Personal Guarantee?

This is an important issue for business owners and directors.

Where a commercial lease contains personal guarantees, the question of whether those guarantees continue during holding over depends on the wording of:

• the guarantee;
• the lease;
• the holding over clause; and
• any later agreement.

A director should not assume that personal liability ended automatically when the fixed term expired.

Equally, a landlord should not assume the guarantee automatically extends to every new arrangement without checking the documents.

This becomes particularly important where the parties are negotiating a new lease for substantially different terms.

What About the Bank Guarantee or Security Deposit?

The same caution applies to lease security.

In Queensland, commercial and retail lease security is largely governed by the lease agreement rather than a central statutory bond scheme. The Queensland Small Business Commissioner notes that there is no mandatory central authority holding commercial lease bonds and that the terms of the lease determine how security is held and released.

If a tenant remains in possession after expiry, parties should check whether the existing:

• bank guarantee;
• cash deposit;
• director guarantee; or
• other security

continues during the holding over period.

A landlord accepting continued occupation while allowing security to expire can create an avoidable commercial risk.

Holding Over Is Not the Same as Exercising an Option

This distinction is critical.

If the original lease contains an option to renew, the tenant normally needs to exercise that option strictly in accordance with the lease.

Remaining in occupation after the lease ends does not necessarily amount to a valid exercise of the option.

For Queensland retail shop leases, the Retail Shop Leases Act 1994 also requires landlords to give tenants written notice of the option date between 2 and 6 months before the option must be exercised.

Missing an option date can therefore have significantly different consequences from simply holding over after expiry.

Retail Shop Leases Have Extra Expiry Rules

If the lease is a retail shop lease governed by the Retail Shop Leases Act 1994 (Qld), additional statutory rules may apply.

Where the lease has no tenant option to renew and there is no other renewal agreement, the landlord generally must notify the tenant within the statutory notice period whether:

• the landlord offers a renewal or extension; or
• the landlord does not intend to offer one.

If the landlord fails to comply, the tenant may in certain circumstances request an extension before the lease would otherwise expire, with the statutory extended period potentially running until six months after the landlord eventually gives the required notice.

Accordingly, a retail tenant approaching expiry should consider:

the lease terms + the holding over clause + the Retail Shop Leases Act

rather than treating expiry as a purely contractual issue.

Can the Landlord Suddenly Tell the Tenant to Leave?

Not simply because the expiry date has passed.

Where the landlord has allowed the tenant to remain in occupation, accepted rent and consented to the continued possession, a tenancy relationship may continue.

The applicable termination process then needs to be followed.

Under the Property Law Act 2023:

• a lease terminable at will generally requires at least 20 business days’ notice; and
• a monthly periodic tenancy generally requires at least one month’s notice ending on the last day of the tenancy period.

However, the lease itself may contain a different valid holding over arrangement.

Landlords should therefore avoid informal statements such as:

“Your lease expired, so you have seven days to leave.”

before checking the actual legal basis for terminating the occupation.

Can the Tenant Leave Without Notice?

The same principle applies to tenants.

A tenant holding over should not assume:

“The lease expired, so I can hand back the keys tomorrow.”

A notice requirement may still apply.

Failing to provide the required notice could potentially expose the tenant to:

• additional rent;
• outgoings;
• make-good issues;
• security deductions;
• contractual claims; or
• disputes about the actual termination date.

The termination process should be checked before the tenant commits to new premises.

Why Holding Over Can Be Useful

Holding over is not necessarily undesirable.

It can provide commercial flexibility where:

• a new lease is still being negotiated;
• the tenant is arranging relocation;
• the landlord is considering redevelopment;
• the parties are waiting for approvals;
• the business is being sold;
• a lease assignment is pending; or
• neither party wants another long fixed term.

For example, a landlord may prefer a short holding over arrangement while considering redevelopment.

A tenant may prefer month-to-month occupation while waiting for new premises to become available.

The risk arises when both sides continue for months without clearly documenting what they have agreed.

Why Holding Over Can Be Risky for Tenants

A long-term business may have significant value tied to its location.

During a holding over arrangement, the tenant may have less security of tenure than under a renewed fixed-term lease.

This can affect decisions such as:

• investing in a new fitout;
• hiring staff;
• financing equipment;
• selling the business;
• entering long-term supply contracts; or
• committing to marketing expenditure.

A buyer considering purchasing the tenant’s business may also be concerned if the business operates from premises with no secure lease term.

Holding over can therefore affect not only occupancy but also business value.

Why Holding Over Can Be Risky for Landlords

Landlords also face risks.

If the arrangements remain informal, disputes can arise over:

• rent;
• notice periods;
• security;
• outgoings;
• repair obligations;
• make good;
• whether a new tenancy was created; and
• when vacant possession must be provided.

A landlord intending to sell or redevelop the property may later discover that obtaining possession requires more notice than expected.

Clear documentation reduces that uncertainty.

Should the Parties Sign a New Lease Instead?

If both sides want the tenant to remain for a meaningful period, documenting the arrangement may provide greater certainty.

Options can include:

• a new fixed-term lease;
• an extension;
• exercise of an existing option;
• a formal monthly tenancy;
• a short-term lease; or
• a documented holding over arrangement pending another event.

Which structure is most appropriate depends on the parties’ commercial objectives.

Example: Holding Over While a New Lease Is Negotiated

A retail tenant’s lease expires on 30 September.

Both parties intend to negotiate another five-year term but have not agreed on the new rent.

The tenant remains in possession from 1 October and continues paying rent.

Rather than leaving the position unclear, the parties could document that:

• occupation is on a month-to-month basis;
• existing lease terms continue where applicable;
• monthly rent is a specified amount;
• either party may terminate on the agreed notice;
• the arrangement does not constitute agreement to the proposed five-year lease; and
• negotiations remain subject to formal documentation.

That can reduce the risk that future conduct is interpreted differently by each party.

What Should a Tenant Check Before the Lease Expires?

Ideally, the issue should be addressed months before expiry.

A tenant should check:

1. Expiry Date

Confirm exactly when the fixed term ends.

2. Option Deadline

If there is an option, determine when and how it must be exercised.

3. Holding Over Clause

Understand the rent, notice period and continuing obligations.

4. Security

Check whether the bank guarantee or deposit remains valid.

5. Make Good

Understand what must happen when the tenant eventually leaves.

6. Business Plans

Decide whether the premises still suit the business for the next several years.

7. New Lease Negotiations

Start early enough to avoid negotiating under the pressure of an expired term.

What Should a Landlord Check?

Landlords should also review the lease before expiry and determine:

• whether they want the tenant to remain;
• whether a new fixed term is appropriate;
• whether rent should be renegotiated;
• whether redevelopment is contemplated;
• whether the tenant has an option;
• what statutory retail lease notices may be required;
• whether the guarantee and security remain adequate; and
• what termination notice applies if holding over occurs.

Where the premises are governed by the Retail Shop Leases Act, statutory renewal-notification requirements should be diarised carefully.

Holding Over vs Periodic Tenancy vs Lease Terminable at Will

These expressions are sometimes used interchangeably in commercial discussions, but legally they can describe different arrangements.

Holding Over

A broad commercial description for remaining in possession after expiry.

Periodic Tenancy

A tenancy continuing for recurring periods—for example month to month—with no fixed final expiry date.

Lease Terminable at Will

Under Queensland’s current Property Law Act, this can include a tenant remaining with the landlord’s consent after the previous lease term ends where no further duration has been agreed.

Correctly identifying the arrangement is important because the applicable termination notice can differ.

Frequently Asked Questions

Does a commercial lease automatically become month to month after expiry?

Not automatically. It depends on the lease wording and what the parties have agreed or implied through their conduct.

Can a tenant stay after the commercial lease expires?

Potentially, if the landlord consents. The resulting arrangement may be governed by the holding over clause, a periodic tenancy or the Property Law Act provisions dealing with leases terminable at will.

How much notice is required to end holding over in Queensland?

It depends on the legal nature of the arrangement and any contrary agreement. Under the Property Law Act 2023, a lease terminable at will generally requires at least 20 business days’ notice, while a monthly periodic tenancy generally requires at least one month’s notice ending on the last day of a tenancy period.

Does accepting rent create a new fixed-term lease?

Accepting rent may be relevant evidence about the parties’ relationship, but it does not automatically recreate the expired fixed term.

Can a tenant still exercise an expired option while holding over?

The option provisions and deadlines need to be checked carefully. Holding over should not be assumed to revive an option that has already expired.

Does the old lease still apply?

A holding over clause commonly continues many of the previous lease terms, but the exact legal position depends on the drafting and the circumstances.

The Key Point: Expiry Does Not Mean the Legal Relationship Disappears

The expiry date is important.

But it does not necessarily mean that all lease obligations vanish at midnight on that date.

If the tenant remains in possession with the landlord’s consent, a continuing tenancy arrangement may arise.

For Queensland commercial leases, the key questions are:

What does the holding over clause say?

Have the parties agreed to a periodic tenancy or another period?

Does the Property Law Act 2023 apply?

What notice is required to end the arrangement?

Do the security, guarantee and make-good obligations continue?

Addressing these questions early can prevent a relatively simple lease expiry from becoming a possession, rent or security dispute.

Commercial Lease Expired or About to Expire?

Ensure Legal assists Queensland landlords and tenants with:

• commercial lease expiry;
• holding over arrangements;
• retail shop leases;
• option renewals;
• lease extensions;
• termination notices;
• new lease negotiations;
• security and bank guarantees;
• make-good obligations; and
• commercial leasing disputes.

If your commercial lease has expired—or is approaching expiry—it is usually better to clarify the legal position before months of informal holding over create uncertainty.

Disclaimer: This article provides general information only and does not constitute legal advice. Holding over arrangements, periodic tenancies, notice requirements and continuing lease obligations depend on the terms of the particular lease, the conduct and agreement of the parties and applicable legislation. Specific legal advice should be obtained for your circumstances.