Make good is where many landlord and tenant relationships end badly. The tenant thinks "remove our stuff". The landlord expects "return it to how it was ten years ago, with new ceiling tiles and patched slabs". The gap between those two positions can be large. This guide explains how to close it.
Defit, strip-out and make good: what is the difference?
- Defit or strip-out: removing the tenant's fitout, including partitions, joinery, ceilings, floor coverings, signage and services installed by the tenant.
- Make good: the broader obligation to return the premises to the condition required by the lease. It can include the strip-out, plus repairs, reinstatement of base-building elements and cleaning.
- Reinstatement: putting back elements the lease requires, such as a standard ceiling grid, base lighting or original carpet.
Start with the lease, not the building
The lease sets the make good standard. Look for:
- The handover condition the lease refers to: cold shell, warm shell or "as at the commencement date"
- Any condition report or photos from the start of the lease
- Whether the landlord can elect to keep some of your fitout in place
- Whether the landlord can accept a payment instead of physical make good
- Notice periods and deadlines
If you hold a retail lease, disputes can be taken to the Victorian Small Business Commission, which provides dispute resolution including mediation before a matter goes to VCAT.
The eight steps of a well-run defit
- Lease and obligation review: read the make good clause, the handover condition and any variations, and agree the target condition with the landlord in writing.
- Site inspection and condition survey: record what exists, what was there at lease start, and what needs to change.
- Hazardous materials assessment: check the asbestos register and, where required, commission a survey before anything is disturbed.
- Scope, pricing and landlord agreement: turn the lease requirements into a written scope the landlord agrees to, including centre management rules for shopping centres.
- Permits, approvals and site setup: confirm whether any building permit is required, programme around trading hours or night works, and set up safe site access.
- Service disconnection and decommissioning: licensed trades isolate and safely disconnect electrical, plumbing, gas and data services, with certificates issued.
- Strip-out, demolition and waste management: remove the fitout, separate recyclables, and dispose of any regulated waste correctly.
- Reinstatement, clean and sign-off: reinstate required base-building elements, clean, and hand over with a complete evidence pack.
Do defits need a building permit?
Many internal strip-outs of non-structural fitout elements are exempt from a building permit under Schedule 3 of the Building Regulations 2018, provided they do not affect structure, essential safety measures or occupant safety. Work that alters fire services, exits, fire-rated construction or structure generally needs a permit. Demolition of a building or part of a building can also require a permit and, in some cases, council report and consent. Confirm with a building surveyor before you start.
What about asbestos?
Buildings in Victoria that were constructed or refitted before the national asbestos ban at the end of 2003 may contain asbestos. The person with management or control of a workplace must identify asbestos that is likely to be disturbed by demolition or refurbishment before the work starts. Removal above small thresholds needs a licensed removalist, WorkSafe notification and, for most licensed removal, a clearance certificate before the area is reoccupied. Our separate guide to asbestos in strip-outs covers the detail.
What should you receive at handover?
A professional defit ends with evidence, not just an empty room. Ask for:
- Photos of the completed make good against the agreed scope
- Certificates for electrical, plumbing and any fire services work
- Asbestos clearance certificate, where licensed removal occurred
- Waste disposal records
- Written landlord acceptance of the works
What drives the cost of a make good?
We do not publish prices, because every lease and building is different. The biggest cost drivers are the reinstatement standard in the lease, the presence of asbestos, access and working-hours restrictions, fire services changes, the amount of waste and whether the landlord keeps any of the fitout.
How AxisPro helps
Our Defit and Make Good pathway follows the eight steps above, with a "what we watch for" check at each stage. We agree the scope with your landlord before work starts and hand over a complete evidence pack, which is what protects your bond and ends the lease cleanly.