Outgoings

Outgoings are the operating costs of a property that a commercial landlord may pass on to tenants. We act for tenants and landlords on outgoings issues across Australia, from drafting the clause through to estimating, auditing, and disputing the annual reconciliation.

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Outgoings are one of the most common sources of dispute in commercial leasing. The clause is often vague, the relevant Act often overrides parts of it, and the actual cost can move year to year by tens of thousands of dollars. Our commercial lease lawyers advise on outgoings from lease signing through to annual reconciliation. The Victorian Small Business Commission provides guidance on outgoings and other charges under a retail lease.

What outgoings cover

A typical commercial lease outgoings clause covers some or all of:

Council rates
Water rates
Land tax (where the relevant Act allows it)
Building insurance
Owners corporation or body corporate fees
Cleaning, security, gardening, waste removal
Common area maintenance and lighting
Lifts, HVAC, and essential safety measures
Management fees (often capped)
Sinking fund or capital reserves (in some leases)
Promotion fund (shopping centres)

What’s actually recoverable depends on the lease, the type of premises, and the relevant retail leases legislation.

Outgoings under retail leases

Each state’s retail leases Act adds rules on top of the lease document. The detail varies, but common features:

The landlord must provide an estimated outgoings statement before each accounting period
The landlord must provide an audited outgoings statement within a set time after each accounting period (often three months)
Some items are prohibited (Victoria prohibits passing land tax through under a retail lease; other states have their own restrictions)
Capital works generally aren’t recoverable unless the lease and Act allow
The tenant generally has audit rights to challenge the statement
If the landlord doesn’t comply with the disclosure or estimate rules, the tenant may be entitled to withhold payment

In Victoria, sections 39 and 46 of the Retail Leases Act 2003 are the key provisions. The landlord’s obligations around outgoings should also be reflected in the disclosure statement. Other states have equivalents.

Outgoings under commercial (non-retail) leases

Where the lease isn’t a retail lease, there’s no statutory overlay. The outgoings clause in the lease is the only source of obligation. That makes the drafting of the clause critical: a vague clause is read against the landlord, and a missing item can’t be added later.

We draft commercial lease outgoings clauses to allow recovery of the items the landlord actually wants to pass through, with a clear estimate and reconciliation mechanism, and exclusions for capital works.

Common outgoings disputes

Land tax being passed through under a Victorian retail lease (prohibited)
Capital works dressed up as repairs and maintenance
Essential safety measures upgrades being recovered as outgoings
Management fees that exceed the lease cap or aren’t supported
Estimated outgoings statement issued late or not at all
Audited outgoings statement not provided within the statutory timeframe
Apportionment of outgoings across multiple tenancies done incorrectly
Single holding vs multi-holding land tax assessments

We resolve these through negotiation, mediation through the relevant small business commissioner, or VCAT and the equivalent tribunals. Outgoings disputes often overlap with make good claims at the end of the lease.

See: Outgoings Disputes

What we do

For tenants

Review the outgoings clause at lease signing and negotiate caps and exclusions
Audit outgoings statements and demand the underlying invoices
Challenge over-recovery and recover overpayments
Defend recovery actions for unpaid outgoings
Run mediation through the small business commissioner

For landlords

Draft enforceable outgoings clauses
Prepare compliant estimated and audited outgoings statements
Defend tenant audit and challenge claims
Recover unpaid outgoings through letter of demand, tribunal, or court

Frequently asked questions

What are outgoings on a commercial lease?

Operating costs of the property that the landlord can pass on to the tenant under the lease, such as council rates, water rates, insurance, and management fees.

Can the landlord pass on land tax?

It depends on the state and the type of lease. Victoria prohibits land tax recovery on retail leases. The ACT allows it (unlike most other states). Other states generally allow it on a single holding basis. We check the lease and the Act before advising.

Can the landlord pass on capital works?

Generally no, unless the lease specifically allows and the relevant Act doesn’t prohibit it. The line between repair and capital improvement is often where disputes start.

What is an estimated outgoings statement?

A document the landlord must give the tenant before each accounting period, setting out the expected outgoings for the year. The relevant retail leases Act sets the requirements.

What is an audited outgoings statement?

A statement issued after the accounting period, supported by an audit, showing the actual outgoings. The tenant can challenge it and demand the underlying invoices.

What if the landlord doesn’t give me an estimate or an audited statement?

For retail leases, the relevant Act usually entitles the tenant to withhold payment until the statement is provided. We use this as leverage in disputes.

Can I recover overpaid outgoings?

Yes, if you’ve been charged for items not properly recoverable. We pursue refunds through negotiation, mediation, and tribunal proceedings.

How much does outgoings advice cost?

Fixed fee on review and audit work. Disputes scoped in stages. Send us the lease and the outgoings statements and we’ll come back with a quote within one business day.

Talk to a commercial lease outgoings lawyer

Whether you’re a tenant facing a large outgoings reconciliation or a landlord trying to recover proper outgoings, send us the lease and the statements and we’ll come back with a clear next step.