A commercial lease can look straightforward on paper. The rent is agreed, the location is suitable, the fit-out looks possible, and the landlord is ready to proceed.
But there is one issue that can seriously affect whether the business can actually operate from the premises: council approval.
In Queensland, tenants should not assume that a premises can be used for their intended business simply because it is advertised as commercial, located in a busy area, or previously occupied by another operator. Council planning rules, building approvals, permitted use restrictions, body corporate by-laws and lease obligations can all affect whether the business can lawfully open and continue trading.
For this reason, approval due diligence should be done before the lease is signed — not after the fit-out has started.
The lease may allow the use, but council may not
A common misunderstanding is that the “permitted use” clause in a lease confirms that the tenant can legally run the business from the premises.
That is not always correct.
The permitted use clause is an agreement between the landlord and the tenant. It sets out what the landlord permits under the lease. It does not automatically mean the local council has approved that use, or that the building is suitable for that activity.
For example, a lease might describe the permitted use as:
“restaurant”
“medical clinic”
“gym”
“beauty salon”
“office”
“wellness studio”
“food and beverage business”
“retail showroom”
However, the tenant may still need to check whether the premises has the correct existing approval, whether a new approval is required, and whether there are limits on signage, parking, trading hours, outdoor seating, noise, waste, ventilation or customer numbers.
This is where many tenants get caught.
Zoning does not answer every question
Zoning is important, but it is only one part of the legal and planning picture.
A property may be located in a commercial, mixed-use or industrial zone, but that does not necessarily mean every business activity is automatically allowed. Different councils apply different planning schemes. Even within the same zone, some uses may be accepted, some may require assessment, and some may be difficult or impractical to approve.
Tenants should ask more specific questions before signing:
Does the current approval match the proposed business activity?
Is the proposed use already lawful at the premises?
Will the tenant need a Development Approval or Material Change of Use approval?
Are there any conditions limiting how the premises can be used?
Will the proposed fit-out trigger further building or planning requirements?
Are parking, access, signage, waste, noise or ventilation likely to be an issue?
Do body corporate by-laws restrict the intended use?
These issues should be checked before the tenant becomes contractually bound to pay rent.
Fit-out works can create approval problems
Many commercial tenants focus heavily on fit-out cost, design and opening date. That is understandable, but it can create risk if the approval position has not been checked first.
Fit-out works may require further approvals depending on the nature of the business and the premises. This can include approvals or compliance requirements for:
kitchen exhaust systems
grease traps and plumbing
fire safety compliance
internal layout changes
structural changes
signage
outdoor dining
accessibility compliance
change in building classification
increased customer capacity
mechanical ventilation
waste storage
parking or traffic impacts
The issue is not limited to major structural works. Even a change in how the premises is used may create approval risk.
For example, a wellness business that adds group classes, a brewery that hosts events, a café that adds outdoor seating, or a clinic that changes service offerings may create new planning or compliance issues.
The financial risk usually falls on the tenant
Most commercial leases place the responsibility for business approvals on the tenant.
This means the tenant may be required to obtain and maintain all licences, permits, approvals and consents needed for the business. If the tenant has not checked this before signing, the tenant may later discover that it must pay for town planning advice, council applications, building certification, reports, rectification works or retrospective approvals.
The lease may also require the tenant to comply with all laws, planning requirements, notices, orders and authority requirements at the tenant’s own cost.
In practical terms, this can mean the tenant is responsible even if the problem only becomes obvious after the lease has commenced.
That is why a commercial lease review should not only look at rent, options and outgoings. It should also consider who carries the risk if the premises cannot be used as expected.
Be careful with informal assurances
Tenants often receive general comments during negotiations such as:
“That use should be fine.”
“The last tenant operated something similar.”
“You can check with council later.”
“There should not be an issue.”
“The landlord has no problem with that use.”
These comments may sound reassuring, but they are not a substitute for proper due diligence.
If the tenant is relying on a statement made by the landlord or agent, it should be confirmed in writing. Even then, the tenant should independently verify the planning and approval position.
Verbal statements are difficult to prove later. If a dispute arises, written records can become very important.
Council enforcement can disrupt the business
If a business operates without the necessary approval or breaches approval conditions, council may investigate. This may occur after a complaint from a neighbour, customer, nearby business, body corporate, resident or member of the public.
If council identifies non-compliance, the consequences can be serious. The tenant may face:
show cause notices
enforcement notices
fines
orders to stop or limit operations
requirements to lodge retrospective applications
rectification works
delays to opening
business interruption
unexpected consultant and legal costs
disputes with the landlord
For some businesses, even a short interruption can cause major financial loss. This is particularly relevant for restaurants, gyms, clinics, beauty businesses, childcare-related uses, pet businesses, car-related uses, entertainment venues and businesses with noise, parking or traffic impacts.
Retrospective approval is not a simple fix
Some tenants assume that if an approval issue arises later, they can simply apply retrospectively.
That approach can be risky.
Retrospective approval may take time, cost more than expected, require specialist reports, involve council conditions, or not be granted at all. The business may also be required to stop or change operations while the issue is being assessed.
By that point, the tenant may already have signed the lease, paid bond or bank guarantee, commenced rent payments, paid for fit-out works and hired staff.
In most cases, it is far safer to identify approval issues before signing than to fix them after trading has commenced.
Retail shop lease tenants should be especially cautious
If the premises is subject to a retail shop lease in Queensland, additional legal considerations may apply under the Retail Shop Leases Act 1994.
Retail shop tenants may have certain rights where misleading conduct or incorrect pre-lease representations are involved. However, these issues are fact-specific, and proving what was said before signing can be difficult.
Tenants should keep proper records during lease negotiations, including:
emails with the landlord or agent
draft leases
disclosure documents
advertising material
council enquiries
planning advice
fit-out plans
written statements about use or approval
notes of key discussions
If there is any concern that the tenant was misled about the suitability or approval status of the premises, legal advice should be obtained early.
What tenants should check before signing
Before signing a commercial lease in Queensland, tenants should consider the following due diligence steps:
Review the permitted use clause carefully.
Confirm whether the current council approval matches the intended business.
Check whether a Development Approval or Material Change of Use approval is required.
Review any restrictions on signage, trading hours, parking, noise, waste or outdoor areas.
Check whether the fit-out requires approval or certification.
Confirm whether the building classification is suitable.
Review body corporate by-laws if the premises is strata-titled.
Obtain written confirmation of any landlord or agent representations.
Consider whether special conditions should be included in the lease.
Get legal advice before signing.
Depending on the circumstances, a tenant may also need advice from a town planner, building certifier, fire safety consultant, architect or other specialist consultant.
Special conditions may protect the tenant
If approval has not yet been confirmed, tenants should consider whether the lease should include special conditions.
For example, the lease may need to be conditional on:
council approval being obtained
landlord consent to fit-out works
body corporate approval
building certification
change of use approval
satisfactory due diligence
finance or business sale completion
licence approval
signage approval
The wording of these conditions matters. A poorly drafted condition may not give the tenant proper protection.
Tenants should avoid signing first and trying to negotiate protection later. Once the lease is signed, the tenant’s bargaining position is usually weaker.
How Ensure Legal can help
Ensure Legal assists tenants and landlords with commercial lease review, drafting and negotiation in Queensland.
For tenants, we can review the lease before signing and identify clauses that may expose you to approval, fit-out, compliance, repair, outgoings or operating risk.
For landlords, we can assist with clear lease drafting so that permitted use, tenant obligations, approval requirements, fit-out responsibilities and compliance risks are properly addressed.
Where planning or building advice is required, we can work alongside town planners, certifiers and other consultants so the legal position and practical risk are understood before the lease is finalised.
Speak with a commercial lease lawyer before you sign
Commercial lease problems are often more expensive after the lease has been signed.
Before committing to rent, fit-out costs, outgoings and business relocation, tenants should check whether the premises can lawfully be used for the intended business — and whether the lease protects them if approval issues arise.
Ensure Legal can assist with commercial lease review and advice for Queensland tenants and landlords.
Contact Ensure Legal before you sign your commercial lease.
FAQ
Do I need to check council approval before signing a commercial lease?
Yes. Tenants should check whether their intended business use is approved or whether further council approval is required. This should be done before signing the lease or starting fit-out works.
Is the permitted use clause enough?
No. The permitted use clause only records what the landlord permits under the lease. It does not guarantee that council approval exists for that use.
What is a Material Change of Use?
A Material Change of Use generally refers to a change in how land or premises are used. Depending on the council planning scheme and the proposed business activity, approval may be required before the new use can lawfully operate.
Can the landlord be responsible for council approval?
It depends on the lease. Many commercial leases place responsibility on the tenant to obtain approvals for the tenant’s business. This should be reviewed before signing.
What if the agent said the premises would be suitable?
Tenants should ask for any representation to be confirmed in writing and should still make independent enquiries. If incorrect or misleading statements were made, legal advice should be obtained.
What happens if council issues a notice after I start trading?
You may need to respond to council, stop or modify operations, apply for approval, carry out rectification works or negotiate with the landlord. Legal and planning advice should be obtained quickly.
Can Ensure Legal help with commercial lease due diligence?
Yes. Ensure Legal can review the lease, explain the legal risks, identify tenant obligations and help negotiate special conditions before the lease is signed. For technical planning matters, a town planner may also be required.
