LandlordAndTenant Archives

An agreement to lease and a deed of lease

April 9, 2026

Commercial Law, Leasing & Property, Property Law, Real Estate Transactions, Small Business Advice, Uncategorized

How are they different?

An agreement to lease and a deed of lease are two similar, but different, documents. The Law Association of New Zealand (TLANZ), formerly the Auckland District Law Society, provides a ‘standard’ form of both an agreement to lease and a deed of lease. Most commercial leases use this ‘standard’ form of agreement to lease or deed of lease.

Agreement to lease

An agreement to lease sets out the main commercial terms of a lease, such as the term, annual rent and rights of renewal. It can also contain further details regarding the fitout and other alterations which the tenant intends to do to ensure the premises are suitable for its business use. It can also set out how the cost and ownership of the fitout and alterations will be met between landlords and tenants.

Agreements to lease can often be conditional agreements while the tenant works through a due diligence process to ensure the property is suitable for its intended use, or to ensure that it can obtain the necessary territorial authority consents to operate its business.

Once any conditions have been satisfied, the agreement to lease is a binding agreement between the landlord and tenant; it can only be cancelled in accordance with the terms of the agreement. An agreement to lease states that a tenant must enter into a deed of lease on the standard TLANZ form once prepared by the landlord.

Deed of lease

Like an agreement to lease, the deed of lease also sets out the main commercial terms of the lease, such as the term, annual rent and rights of renewal. It goes further than the agreement to lease; it allows a tenant to assign the lease and additional terms set out the position in relation to the day-to-day management of the lease, such as maintenance obligations for both the landlord and the tenant, and what happens at the end of the lease.

Why you should also enter into a deed of lease

An agreement to lease does not allow the tenant to assign its interest in the lease. However, a deed of lease does allow this. If a tenant wishes to sell its business, they will need to enter into a deed of lease to have the benefit of the assignment provisions in the deed of lease. If the tenant wants to obtain bank lending for its business, the lender may want to see the deed of lease, and may require that a deed of lease is entered into as part of its financing approval.

The agreement to lease provides that the parties will enter into a deed of lease on the ‘then current’ form of deed of lease.

Most importantly, the agreement to lease also incorporates all of the terms of the standard deed of lease, so the landlord and tenant are agreeing to be bound by a document they have not seen or signed. In particular, if the parties have not received legal advice before entering into the agreement to lease, they may not have full knowledge of the terms of the deed of lease and what they have agreed to, and may find that the obligations in the deed of lease are not as they expected.

We can help

While agreements to lease can be helpful, we recommend that you enter into a deed of lease shortly after the agreement to lease is unconditional and/or the lease has commenced. This will help ensure that all parties have a full understanding of the terms of the lease and all the benefits (and obligations) offered under the lease.

We can help in advising on the terms of the agreement to lease and the resulting deed of lease prior to execution. We can also assist with documenting the terms of an agreement to lease into a deed of lease.

DISCLAIMER: All the information published in Property Speaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property Speaking may be reproduced with prior approval from the editor and credit given to the source.
Content Copyright © NZ LAW Limited, 2026. Editor: Adrienne Olsen. E-mail: [email protected] Ph: 029 286 3650

Rent reviews in commercial leases

November 11, 2025

Business & Employment, Insights & Tips, Landlord & Tenant, Legal Updates, Property & Commercial Leasing

Methods of review

Two of the most important considerations for parties to a commercial lease are, ‘What is the annual rent?’ and ‘How and when can the rental amount be reviewed?’ The answers are always found in the deed of lease for the premises.

The first schedule of The Law Association Deed of Lease (the most common format for commercial leases) sets out the methodology relating to rent reviews, including the review dates and the review types. There are three main methods of rent review:

Market rent review
CPI (Consumer Price Index) rent adjustment, and
Fixed rent adjustment.

Most leases include a combination of two of the three rent review/adjustment methods, with a common pattern being fixed with market rent reviews on renewal dates.

The Law Association’s Deed of Lease standard terms are discussed below. Care, however, should be taken to ensure the clauses have not been modified in your lease.

Market rent review

When conducting a market rent review, either party may give the other party written notice of what the new market rent amount will be from the rent review date.

Notice cannot be given earlier than three months before the relevant rent review date, and it can be given at any time before the next rent review date (regardless of the method of the next rent review). If it is given more than three months after the rent review date, however, the new annual rent amount will only apply from the date of service of the notice rather than the rent review date.

Typically, the rent review process is initiated by the landlord obtaining a market rent valuation to use as the basis for the new rent figure. The other party then has 20 working days to agree, or dispute, the market rent value.

If the new rent value is disputed, the matter will either be decided by an arbitrator or, more commonly, by each party appointing a registered valuer to act as an expert, with the valuers to agree on the market rent value. If the valuers cannot agree on the market rent, a third party appointed jointly by the valuers will decide.

CPI rent adjustments

The second method of rent review is a CPI rent adjustment; this follows a formula set out in the deed of lease. CPI rent adjustments can only increase the rent payable, if the CPI rent adjustment results in a lower amount, the rent will remain the same.

CPI adjustments can be popular with landlords as they are less costly and time consuming to complete when compared with market rent reviews.

A drawback, however, is that in high inflation environments, CPI adjustments can result in significantly larger than anticipated rent increases, and the new rent payable may not be reflective of the general market.

It is open to landlords and tenants to agree to a different rent adjusted amount, even if the lease provides for a CPI adjustment, but agreement on rent reviews is not always easy to reach.

Fixed rent adjustment

In a fixed rent adjustment situation, the rent will increase by a fixed amount at specified intervals, regardless of changes in the market rent amount or CPI. This method of rent adjustment can provide both the landlord and tenant with certainty on rent amounts moving forward.

Limits for a rent review/adjustment

The lease may also provide for a limit for the rent review. Most leases specify that the reviewed/adjusted rent will not be less than the rent payable immediately before the relevant review or adjustment date, which means that the rental amount will either increase or stay the same. It won’t decrease!

Some leases specify that the rent will not be less than the annual rent payable at the commencement of the current lease term. Other leases specify that the rent will not be less than the rent payable at the commencement of the lease, though this is not common. The landlord and tenant are free to agree to an alternative method of limiting rent reviews if it suits their circumstances.

Important to understand the process

It is very important for both the landlord and the tenant to understand the rent review processes in the lease, as it can have significant implications for both parties. We can assist if you have any questions on your lease rent review process.

DISCLAIMER: All the information published in Property Speaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property Speaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022. Editor: Adrienne Olsen. E-mail: [email protected] Ph: 029 286 3650

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