Commercial lease renewal checklist for Mumbai offices

Start earlier than feels necessary

Begin the review well before expiry. A relocation needs time to shortlist, negotiate, fit out and move, and a landlord who knows you cannot move in time will not negotiate. We suggest opening the conversation internally 9 to 12 months out, and longer for large floors or heavy fit-outs.

Put three dates in one place: lease expiry, the last date to serve any renewal notice, and the date by which a move would have to be decided. The second is the one most often missed.

1. Read the renewal clause before anything else

Renewal clauses vary more than people expect. Check what you actually hold:

• Is renewal your right, or "subject to mutual consent"? The second gives you no leverage on paper.
• What notice must you give, to whom, and in what form?
• Does the clause fix the renewed rent, set a formula, or leave it to negotiation?
• Does the renewed term carry the same lock-in, escalation and deposit, or can the landlord reset them?

2. Build your alternative before you negotiate

Your position depends on whether a move is real. Shortlist two or three comparable buildings in the micro-market, ask for current terms, and know the effective cost of moving: new rent, fit-out, brokerage, downtime and reinstatement at the old premises.

Also look at the landlord's side. How much of the building is vacant, and what is on offer to other tenants? A landlord with vacancy in the building has more reason to keep you.

3. Negotiate effective rent, not headline rent

A headline rent per square foot hides most of the deal. Compare offers on the total cost over the term, including:

• Escalation: the percentage, how often, and whether it compounds.
• Rent-free or fit-out period on renewal or relocation, and any contribution to fit-out.
• The area the rent is charged on, and how that area is defined.
• Parking: allotment, charges and whether they escalate.

4. Pin down maintenance and common charges

Maintenance and common area charges are where renewals quietly change. Ask for the definition in writing: what is included, how it is calculated, whether it is capped, and how increases are justified. Check whether charges are on carpet or saleable area, and whether any of the landlord's capital costs are being passed through.

5. Lock-in, notice and exit

A long lock-in with a short notice period favours the landlord; the reverse favours you. Look at the lock-in length, the notice needed to exit after it, and the penalty for leaving early. If your headcount is uncertain, an exit right or a partial surrender option can be worth more than a small rent reduction.

6. Security deposit

Confirm the deposit amount in months of rent, whether it rises with renewed rent, how quickly it is refunded after exit, and what deductions are permitted. Ask that the refund timeline and the deduction heads are written into the lease, not left to correspondence.

7. Check the building, not just the lease

A renewal is a good moment to ask the landlord for the building's compliance position. Ask to see:

• The Occupancy Certificate and any part-occupation approvals.
• Fire safety clearances and their validity.
• Any pending notices or disputes that could affect your use of the premises.
• Landlord's title and authority to lease, including any lender or co-owner consent.

8. Fit-out, reinstatement and handback

Know what you must hand back. Many leases require reinstatement to the original condition, which can be a real cost on exit. If you renew, agree in writing whether your existing fit-out is accepted as it stands, and whether reinstatement obligations are reduced or removed.

9. Paperwork, registration and tax

A lease longer than one year generally needs to be registered, and stamp duty is payable. Rates and the basis of calculation depend on the term, rent and deposit, so confirm current figures with your lawyer. Agree who bears registration and stamp costs. Rent is usually subject to GST where the landlord is registered, and TDS applies to rent payments above the prescribed threshold. Your tax advisor should confirm how both apply to you.

This guide is general information and not legal or tax advice.