Lock-in and escalation: reading the term sheet

The lock-in is the stretch neither side may end the lease. For offices it's typically one to five years. A tenant who leaves during it usually owes the rent for the rest of the lock-in. After it, either side can usually end the lease on three to six months' notice.

Ask for the lock-in to match how sure you are of your plans, not the full term: a five-year lease with a three-year lock-in is common.

Many Chennai office leases raise the rent up to 15% every three years (a Chennai tech-park lease filed in 2019 does exactly this); others raise it every year instead, at around 4–5%.

Check whether escalation applies to maintenance (CAM) and car parks too; the agreement decides.

Grade A offices ask 6 to 12 months' rent as a refundable deposit; two recent Chennai tech-park deals settled at about six. Tamil Nadu's tenancy law makes a deposit above three months lawful only if the agreement says so, so make sure it's written in, with when and how it comes back.

• GST at 18% applies to commercial rent when the owner is GST-registered.
• Since 10 October 2024, when an owner who isn't registered rents to a GST-registered business, the tenant pays the GST under reverse charge (composition taxpayers were taken out of this from 16 January 2025).
• Stamp duty and registration are usually paid by the tenant: see registering a commercial lease.

Rent-free months for fit-out and the level of maintenance charges vary building to building; there's no reliable Chennai benchmark, so ask for both in writing. The move-in cost calculator adds up the first payments.