Deed of Lease Seventh Edition

The Seventh Edition Deed of Lease brings substantial updates to reflect modern leasing challenges, including economic volatility, health and safety reforms, and lessons from the Covid-19 pandemic. This guide outlines key changes—covering rent reviews, outgoings, insurance, emergency access, seismic ratings, and more—and explains what they mean for both landlords and tenants. Understanding the new lease terms is crucial before signing on the dotted line.

A Guide to the Seventh Edition Deed of Lease: Key Changes You Need to Know

The Law Association of New Zealand’s new Seventh Edition Deed of Lease reflects major market shifts since the Sixth Edition’s release in 2012. In light of events like Covid-19, updated health and safety laws, and seismic concerns, this revised lease addresses both evolving legal standards and common points of negotiation.

Key updates include:

• Renewal & Rent Review:
  Parties can now specify a renewal notice period, and a fixed rent adjustment method has been added alongside CPI and market review. New rent ratchet options let parties set upper and lower limits for CPI and market adjustments.
• Outgoings:
  The list of chargeable outgoings has expanded significantly. Landlords must provide budgeted outgoings each year and can only recover costs incurred within the last 24 months.
• Insurance:
  Default excess is now $5,000 (up from $2,000), with a 24-month cover period for rent loss. Tenants face broader liability for excess and repair costs under certain conditions.
• No Access in Emergency:
  The “fair proportion” clause for rent/outgoings abatement (made famous during Covid-19) now has clearer guidance—parties can pre-agree a percentage, with reassessment after 20 working days of inaccessibility.
• Security:
  Tenants may now provide either a bank guarantee or rental bond. Bank guarantees may be harder to release on assignment, whereas bonds must be released under certain conditions.
• Other Notable Changes:
  
  • Seismic ratings can now be noted, though not guaranteed.
  • Landlord’s mortgagee consent can be mandated.
  • Enhanced Health & Safety obligations.
  • Two new schedules: one for tenant’s fixtures/fittings, and one for plans and car parks.

The Seventh Edition aims to bring balance and clarity to commercial leasing. If you're entering a lease, make sure you're across the changes—or contact us for tailored advice.