What exactly is a tenant improvement allowance and how does it benefit the tenants or the landlords?
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  • Well, a tenant improvement allowance is a concession given to the tenant by the landlord to make renovations or additional construction to a commercial property taken on rent.
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  • Thanks! So, is a tenant improvement allowance applicable on a rental residential premises?
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  • A tenant improvement allowance is a provision made by the landlord in a commercial property lease agreement. It is owing to the fact that business houses need to make renovations to facilitate smooth functioning of their businesses.
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  • Okay! So no tenant improvement allowance is given on a residential premises?
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  • Well, residential properties don't get tenant improvement allowances owing to the fact that tenants rarely need to or rather, allowed to, renovate the residential premises. The only kind of renovations carried out in residential premises are repair works that are carried out on a mutual basis wherein the landlord, if a genuine and ethical person, carries out the repairs for the good of his or her own property and the well being of the tenant. In some cases the costs incurred are paid by the tenant, which are then compensated in the rent.
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  • Okay! What kind of renovations does a tenant improvement allowance cover?
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  • A tenant improvement allowance primarily covers hard construction costs only though some tenants may seek and negotiate including soft costs like architects' and attorney fees, permit charges, legal fees, etc. It generally doesn’t cover furnishings and moving costs.
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  • A tenant improvement allowance is money to help pay for the improvement to an office apace, from a landlord to a tenant.


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