Make good in NSW: what the rules say and what your lease decides

General information, not legal advice. This guide explains NSW rules in plain English as at 28 October 2026. It is not advice about your lease. For advice on your situation, speak to a property lawyer or contact the NSW Small Business Commission.

What does make good mean in NSW?

Make good is a contractual obligation. Your lease says what condition the premises must be in when you leave. The NSW Small Business Commission's NSW Retail Tenancy Guide defines make good as returning the premises to one of three standards:

1. the condition they were first built in
2. the condition they were in at the start of your lease
3. some other condition the lease specifies

The same guide says make-good clauses "typically" require the premises back "in an empty and neutral state". That is not necessarily how you found them. It can mean stripping back to the base building (bare shell) and redecorating, even if you took over a fitted-out space.

What do "cold shell" and "warm shell" mean?

The NSW guide notes that 'cold shell' and 'warm shell' terms can require you to take services back to capped points and install hoarding. In plain words: power, water, data and air-conditioning connections are cut back and sealed where they leave the base building, and the shopfront may need to be boarded up. These are bigger jobs than a clean and paint, so check whether your lease uses them.

New to the topic? Start with what make good is and make-good clauses explained.

Does the NSW Retail Leases Act 1994 apply to my lease?

The Retail Leases Act 1994 (NSW) covers retail shop leases. According to the NSW Small Business Commission, a shop is generally covered if:

• it is less than 1,000 m²
• it is used for a business type listed in Schedule 1 of the Retail Leases Regulation 2022, or it is in a retail shopping centre
• the lease is for at least six months and less than 25 years

Shops of 1,000 m² or more, offices above a retail shopping centre and some other premises are excluded. These tests have exceptions, so confirm with the Commission or a lawyer before relying on them.

Quick check:

• Shop, café, salon or service business in a shopping centre or on a retail strip? Possibly covered. See also retail make good.
• Office, warehouse, factory or depot? Likely outside the Act. Your lease and general law decide. See office make good and warehouse make good.
• Not sure? Ask the NSW Small Business Commission before you rely on any retail rule.

What should I have been told about make good before signing?

For retail leases, the lessor must have a draft lease ready before advertising or offering the premises. The Lessor's Disclosure Statement must be given at least 7 days before you enter the lease, and you return a signed Lessee's Disclosure Statement (Part B) no later than 7 days before the lease starts.

The Small Business Commission tells lessors to "ensure that clear details are provided" about works required at the end of the lease to make good the premises. Its guide also says the disclosure statement should show who pays fit-out costs, and which fit-out items can stay and which must be removed.

That makes your disclosure statement one of the most useful documents at the end of the lease. If it says your counter or cool room can stay, a later demand to remove them deserves a question.

Do I need a condition report in NSW?

The NSW Small Business Commission recommends an inspection or condition report, including photos, signed by both parties before you take possession. At the end of the lease, its guide says you may "ideally" be able to refer back to that report.

It is a recommendation, not a guarantee of protection. Without it, a dispute about what was there at the start becomes your word against the landlord's. Gather move-in photos, agent listings, fit-out drawings and invoices now.

What happens to my bond or bank guarantee?

Because a landlord can draw on a guarantee without notice, a written make-good sign-off before you hand back the keys matters more than almost anything else on this page. For non-retail leases, the lease decides how and when security is returned.

What if I do not finish the make good?

The NSW Small Business Commission says that if lessees do not carry out the make good, they will normally be liable to pay the lessor's costs. It also notes that lessees often agree to a payment in lieu, leaving the landlord to do the work.

Two legal points come up often in NSW disputes:

• Section 133A of the Conveyancing Act 1919 has long limited damages for breaching a covenant to leave premises in repair to the amount the landlord's property value is reduced, and allows no damages for end-of-lease repairs if the premises are to be demolished or rebuilt soon after. The High Court discussed it in Graham v The Markets Hotel (1943). We have not confirmed the section's current wording, so ask a lawyer whether it applies to your clause.
• Alteration covenants are treated differently. In Tabcorp v Bowen [2009] HCA 8, the High Court allowed a landlord to recover the full cost of reinstating a foyer the tenant had rebuilt without consent, not just the drop in value.

Many retail leases also include a clause letting a quantity surveyor make a binding decision on make-good costs if you cannot agree. The surveyor is usually nominated by an industry body such as the Australian Institute of Quantity Surveyors. Check whether your lease has one before a dispute starts.

For how to weigh up a cash offer, see make-good payment in lieu.

How are make-good disputes resolved in NSW?

For retail leases:

1. Ask for the claim in writing, item by item, linked to the lease clauses.
2. Mediation. Apply to the NSW Small Business Commission. Applying is free; if a session goes ahead, the parties share the mediator's fee equally.
3. NCAT. NCAT says mediation is compulsory for most retail lease claims before you apply. Claims must be made within 3 years of the liability arising. NCAT's limit is $750,000 for leases entered into on or after 1 July 2017 and $400,000 for earlier leases (Source: NCAT, Retail leases).

For office, industrial and other non-retail leases, there is no compulsory retail mediation step. Disputes are resolved under the lease, often through negotiation, an expert clause or the courts. Get legal advice early.

What NSW rules apply to the strip-out work itself?

The NSW Work Health and Safety Regulation 2025 started on 22 August 2025 and replaced the 2017 Regulation (Source: SafeWork NSW). Your contractor should be working to the current version.

A NSW make-good checklist

• Find your lease, variations, both disclosure statements and fit-out approvals
• Confirm whether your lease is a retail shop lease
• Check whether the lease says original condition, start-of-lease condition, cold shell or warm shell
• Look for a quantity surveyor clause for cost disputes
• Collect your move-in condition report and photos
• Ask the landlord in writing what can stay
• Get the asbestos register and confirm licences and approvals
• Get comparable quotes from licensed, insured contractors
• Inspect with the landlord and get written sign-off before handing back keys
• Follow up your bank guarantee (two months) or bond with NSW Fair Trading

Our lease exit timeline sets out when to do each step, and the office make good checklist covers office tenancies in detail. Leasing in Victoria as well? Compare make good in Victoria.

How MAKE GREAT can help a NSW tenant

• Analyse my lease. Upload your lease and our lease check finds the make-good, shell-condition, alterations and dispute clauses, with page and clause references. It is preliminary, not legal advice. It separates what the lease clearly requires from what needs clarifying, and unclear or high-risk findings are flagged for review by a person.
• Get my make-good quotes. We turn your lease and photos into a clear brief and invite up to three approved contractors who cover your part of Sydney. If fewer than three are eligible, we tell you. Read how we vet contractors.
• Compare like for like. Quotes sit side by side with inclusions, exclusions and licence and insurance status. A clear, comparable quote is also useful evidence if you are negotiating a payment in lieu.

You choose the contractor and contract with them directly. MAKE GREAT is a marketplace. We are not a builder, a certifier or a law firm.

How we are paid: Free for tenants. If you hire a contractor through us, they pay us a referral fee. Nobody can pay to rank higher. You are never obliged to accept any quote.