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What are outgoings in a commercial lease?

Leasing

When you see a commercial property advertised as “$50,000 per annum + Outgoings,” the outgoings part is just as important as the rent. In some cases, high outgoings can make a seemingly “cheap” property impossible to afford.

1. What’s Usually Included?

recoverable outgoings generally fall into several categories:

  • Government Charges: Council rates, water and sewerage charges, and emergency services levies.
  • Building Operation: Electricity for common areas, cleaning, air conditioning maintenance, and security.
  • Administration: Management fees and building insurance premiums.
  • Body Corporate: If the property is part of a strata title, the body corporate levies are often passed through.

2. Net vs Gross Leases

  • Net Lease: You pay a base rent plus your share of outgoings. This is common in industrial and large office spaces.
  • Gross Lease: You pay a single, inclusive amount. The landlord covers the outgoings. This provides more cost certainty for the tenant but typically has higher annual rent increases.

3. The Land Tax Rule

In Queensland, there is a critical distinction between a standard commercial lease and a Retail Shop Lease.

  • Standard Commercial: The landlord can charge you for their land tax.
  • Retail Shop Lease: Under the Retail Shop Leases Act 1994 (Qld), it is illegal for a landlord to pass on land tax to a retail tenant.1

4. Auditing and Estimates

Your lease should require the landlord to provide:

  1. An Estimate: At the start of the financial year.
  2. An Audited Statement: Within a few months of the end of the year to show actual costs. If they spent less than the estimate, you should receive a refund or credit.

Review the Budget

We don’t just look at the legal wording; we check the “Outgoings Budget” provided by the landlord. If the numbers don’t add up, we help you negotiate a cap or a “Gross” arrangement to protect your cash flow.

About to sign? Contact Bell & Senior for a pre-lease check. Call (07) 5532 8777.

  1. Retail Shop Leases Act 1994 (Qld) s 37(1). ↩︎

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