Quick answer
When a landlord asks for a bond, bank bond or security deposit on a New Zealand commercial lease, owners usually fund it from cash, a short unsecured facility sized on turnover (typically $5,000 to $500,000), or as part of a property-secured loan ($20,000 to $5,000,000) that also covers the fit-out. Landlords may also ask for a personal guarantee, which is worth understanding before you sign.
Key points
- Landlords commonly want security: a cash bond, a bank bond or a personal guarantee.
- A bank bond is a fee-based arrangement with a bank — it can tie up a facility or cash.
- Lease costs rarely come alone: plan the bond, fit-out and opening stock together.
- Get legal advice on the lease before you pay anything.
You’ve found the spot. The foot traffic’s right, the rent works, the landlord’s keen. Then the heads of agreement arrive: a bond of several months’ rent, rent in advance, and a request for a personal guarantee. Suddenly the move needs a lot more cash than you’d planned — before you’ve spent a cent on the fit-out.
This page explains what landlords usually ask for and how main-street owners fund it.
What security do landlords ask for?
Business.govt.nz says landlords’ security requirements can include:
- A cash bond or security deposit — held by the landlord, usually returned at the end of the lease if you’ve met your obligations.
- A bank bond — described by business.govt.nz as a fee-based financial agreement, where a bank promises to pay the landlord up to an agreed amount if you default. The bank will usually want security from you, which can tie up cash or borrowing capacity.
- A personal guarantee — where the business owner personally takes responsibility for the lease obligations if the business can’t meet them.
Landlords may also ask for rent in advance, and there can be legal costs for preparing the lease.
What does a move actually cost up front?
The bond is often just the first line. A realistic opening or relocation budget includes:
| Cost | Notes |
|---|---|
| Bond, bank bond or deposit | Often a multiple of monthly rent plus outgoings |
| Rent in advance | Sometimes the first month or more |
| Legal fees | Your lawyer’s review of the lease |
| Fit-out | Usually the biggest line — see shop fit-out finance |
| Make-good at your old site | Restoring the previous premises if you’re moving |
| Opening stock | Especially for retail |
| Overlap rent | Paying for two premises during the move |
Our fit-out budget checklist includes the bond and opening costs so you see the full picture.
How is a bond usually funded?
From cash, if you have it — though using all your cash on a bond leaves little for the fit-out and opening months.
With a short unsecured facility — typically $5,000 to $500,000 for trading businesses, sized on turnover and bank statements. This suits established businesses moving to a better site, where takings are proven.
As part of a property-secured loan — $20,000 to $5,000,000 — that covers the bond, fit-out and opening costs together. This suits new businesses and bigger moves, and allows a longer term.
Funding the whole move in one plan is usually better than discovering a shortfall halfway through the fit-out.
Planning a move? Start a 60-second enquiry and talk it through. There’s no credit check to ask.
What should I negotiate before paying?
Business.govt.nz encourages tenants to negotiate lease terms and to get professional help if they don’t have deep experience with commercial leases. On the security side, it’s worth discussing:
- The size of the bond, especially if you have a strong trading history
- Whether a bank bond can replace a personal guarantee, or the reverse
- When the bond reduces or is returned, for example after a period of on-time rent
- Landlord incentives such as rent-free periods or fit-out contributions — business.govt.nz notes these are often available, especially on longer leases
- Make-good provisions, which affect what you’ll spend when you leave
Our commercial lease checklist covers these and more.
An illustrative example
Illustrative only. A florist with three years of steady trading finds a larger corner site two doors up. The landlord asks for a bond, the first month’s rent in advance and a personal guarantee. The fit-out includes a cool room and new benches.
Rather than drain the business account, the owner funds the bond, fit-out and extra opening stock with one unsecured term facility sized on three years of statements, keeps a cash buffer for the overlap month at both sites, and has a lawyer review the guarantee before signing.
Before you enquire
- The landlord’s heads of agreement or draft lease
- Fit-out quotes and an opening stock estimate
- Twelve months of business bank statements
- Details of your current lease, including make-good obligations
What happens to the bond when you sell or leave?
The bond doesn’t disappear once it’s paid — and it’s worth knowing how you get it back.
- At the end of the lease, the landlord usually returns the bond once you’ve met your obligations, including any make-good work. Leave enough time and money to complete the make-good properly.
- When you sell the business, the buyer typically provides new security to the landlord, and your bond is released when the lease is assigned. Check the assignment clause to see whether you remain liable after you sell.
- With a bank bond, the bank’s commitment usually stays in place until the landlord releases it. Ask what the bank needs to cancel it, because it may be holding security from you in the meantime.
- With a personal guarantee, check whether it ends when the lease is assigned or continues — some guarantees outlast your ownership of the business.
See what you could qualify for
If a new lease is asking for more up front than you have spare, start your 60-second enquiry. We don’t run a credit check when you ask, your enquiry stays with one team, and a person will ring to talk it through. Please list the bond, fit-out and other costs as accurately as you can — it helps us match you properly first time.
Frequently asked questions
What is a bank bond on a commercial lease?
Business.govt.nz describes a bank bond as a fee-based financial agreement. The bank promises to pay the landlord up to an agreed amount if you don't meet the lease. Banks usually want security or a cash deposit in return.
Can I borrow to pay a lease bond?
Yes. A bond is a common reason to borrow when opening or moving. It's often best funded as part of the overall move — bond, fit-out and stock together — so nothing is forgotten.
Will the landlord want a personal guarantee?
Often. Business.govt.nz notes landlords may ask for a personal guarantee, which makes the business owner personally responsible for the lease obligations. Get legal advice before agreeing.
Do I get the bond back?
Usually, at the end of the lease, if you've met your obligations including any make-good requirements. Check exactly what the lease says.