Essential factors and lease clauses for investment property Pt 2

This article explores the remaining critical lease clauses that all property investors should be mindful of in their bid not only to retain the rental and capital values of their properties but also to enhance such values in real terms.

Security Deposit
This is the amount payable by the lessor at the commencement of the lease, meant to protect the landlord if the lessee fails to discharge all or some of its obligations stipulated in the lease. This should be a reasonable fee. Normally the lessor would press for a higher security deposit motivated by ‘anticipated’ future defaults and lessees would resist this as they would not want to tie their cash into a non-beneficial use. Striking a balance between the interests of both parties is vital, and would to some extent depend not only on how knowledgeable both parties are about the market but also on anticipation of future trends and how well sharpened their negotiation skills are.