New lease conditions for the Wollongong Conservatorium of Music could force the institution out of the Gleniffer Brae precinct.
Conservatorium boss Andrew Snell said the organisation's continued use of the historic manor house was dependent on "onerous" lease conditions as well as Wollongong City Council's possible future plans for the site.
The conservatorium uses the manor house for office space and teaches out of the former school buildings.
It has been using Gleniffer Brae free of charge since citing severe financial difficulties in 2006, but agreed to begin paying rent from January 1 this year.
The council and the conservatorium are still negotiating the figure, which is expected to include a yearly maintenance fee.
Mr Snell said he had begun negotiating with the council to extend the conservatorium's lease on the manor house after the council rejected the University of Wollongong's development proposal.
However, he has since encountered financial stipulations associated with the new lease that he said could force the organisation out of the site.
"The lease is quite onerous concerning what the conservatorium will need to [financially] contribute to Gleniffer Brae for its upkeep [should the UOW proposal not proceed]," Mr Snell said.
"Our original lease required us to pay 40 per cent of the council's annual maintenance bill for the manor house, but this was a predetermined yearly figure both the council and the conservatorium had agreed upon.
"Under the new terms there's no agreed figure - it's 40 per cent of what's spent by the council and we have to pay it within 14 days.
"We can't agree to that."
Mr Snell said that under the old lease the conservatorium contributed about $18,000 a year to the house's upkeep, however, he was concerned the organisation could be hit up for a considerably greater amount if it agreed to the current terms on offer.
A council spokesman disputed Mr Snell's claims, saying no predetermined figure had been included in the current lease.
"The new rent is to be determined by an independent valuation," the spokesman said, adding the council would not be commenting further as details of the lease were considered commercially confidential at this stage.
The conservatorium has until March 31 to sign off on the lease.