commercial contract vs residential

I have just turned down my $450 per week rent that I was so happy about.
The tenant left everything to the last minute, then basically demanded that he wanted a comercial tenancy agreement over a residential house, after we explicitly told them it was residential only.
I do not know anything about comercial tenancy, and he wanted a 2 year lease with 2, 2 year options (6 years total). The length of time did not bother me, the longer the better. The point that worried me was, I know nothing of the rules and regulations of commercial property, thoughts of wheelchair access, fire sprinklers, and unisex toilets wizzed through my head. Also the fact that if a tenant plays up to much or makes life dificult with unreasonable demands you reserve the right (in most cases) to not renew the lease, wheras in comercial property I have no idea what the rules are. Not to mention the tax implications, and possible personal liability issues. Im sure there is a very valid reason why commercial property gets double the rent of the same standard accommodation in residential gets.
Anyway the decision was made, and the property manager and I were both told to shove it, and promptly hung up on . Solicitors are such a lovely bunch of people especially when they can't get what they wan't.
I would like to know if the decision I made was the right one, from people who know the differences between residential and commercial leases.
I can only comment on the commercial side of things!

The lease should be set up so the tenant pays:

Rezoning of the land with the Council

Council Rates

Water Rates

Emergency Services Levy

Management Fees

Lease preperation and regestration on the title

Reasonable collection costs for overdue rent and penalty payments can be charged.

Repainting at end of tenancy and after x number of years.

Maintainence costs

Land Tax ( if single property puts you into needing to pay )

Strat Fees ( if appliciable )

What they don't pay is a bond but get a Directors Gaurantee!

As far as I know there is no need for disabled acces or unisex toilets and you put a disclaimer about property is suplied as is with tenant accepting that it is up to him/her if it is suitable for the use that they intend to put it to.

Commercial Leases have a review date where cpi or agreed % rises in the base price. Now in SA I think the law is a commercial lease is for a minimum of 5 years.

Make sure there is an out clause/s that if rent is paid late conditions of lease are breached that you can refuse to renew with them.

The laws do alow them to get behind further in their rent than residential in SA so have a good penalty rate built in for late payments 2% over your banks overdraft rate is typical.

You have to decide if you want to be input taxed like residential or be a GST participant.........I chose GST to get the most claims back before the end of the year.

All you should have to pay is insurance ( if required ) and your loan repayments :D

A commercial lease can be used on a residential propety if the residence is part of the commercial property. eg fish shop on bottom floor and residence above there could be one lease for both.

Relevant SA Act;


Application of Act

(1) This Act applies to a retail shop lease if the premises to which the lease applies consist of a retail shop or a retail shop together with an adjacent dwelling."

Also, as bundy mentioned, the lease must be for a minimum 5 years;


20B. (1) The term for which a retail shop lease is entered into must be at least five years.

The term of a retail shop lease is worked out under this section on the assumption that any right or option of renewal or extension under the lease or a collateral agreement will in fact be exercised."

So the 2 year initial lease with 2 x 2yr options would be fine.

Hope it helps

Also be careful to check whether GST applies to the rent - and whether it would affect the CGT discounts on the property etc.