Outgoings: other charges under a lease
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What are outgoings?
Outgoings are costs payable relating to the premises or in the case of a multi-occupancy property, such as a shopping centre, the premises and the property. When leased these costs may be transferred to the tenant. Examples of outgoings include water rates, council rates and owner’s corporation fees.
A landlord must provide the tenant with various documents outlining outgoings (estimates and actual) at various points over the term of the lease.
Information a landlord must provide to a tenant about outgoings
Under various sections of the Retail Leases Act 2003 (the Act), the landlord must provide the tenant with the following:
Category of outgoings (section 39 of the Act)
The tenant under a retail premises lease is not liable to pay outgoings except where they are detailed in the lease.
Disclosure statement containing estimates of outgoings
The landlord must give the tenant a disclosure statement no later than 14 days before the lease is entered into. If a statement is not provided, the tenant is not liable to pay rent, if they have provided the landlord with written notice that they have not received the disclosure statement. This must be done during the seven days before, or during the 90 days after entering into the lease.
Estimate of outgoings (section 46 of the Act)
The landlord must give the tenant a written estimate of the outgoings for which the tenant is expected to pay under the lease. This must be done before the lease is entered into, and at least one month before the start of each of the landlord’s accounting periods during the term of the lease (i.e. each year). The tenant is not required to pay for outgoings if an estimate has not been given.
Statement of outgoings
All the landlord’s expenses must be detailed in an audited statement. This statement must list the accounting periods and related outgoings which the tenant is responsible to pay for. The landlord must give this statement to the tenant no later than three months after the end of each accounting period.
If the tenant is only required to pay for GST, utilities, council rates and insurance, and the statement is accompanied by proof of payment i.e. invoices, assessments or receipts, this statement does not have to be audited.
Advertising and promotion statements
If the retail premises are in a shopping centre, the landlord must provide a written audited statement detailing all advertising and promotion expenses in each of the landlord’s accounting periods.
The VSBC outgoings information sheet is also available for download.
Case study
The situation: Before the lease commenced, the landlord provided the tenant with an estimate of outgoings. The estimate was $7,000 for outgoings per annum.
Within the following year however and after paying all the invoices, the tenant realised they were paying far more than the estimate provided.
The process: The landlord agreed they had underestimated the amount for outgoings per annum.
The solution: Through negotiating with a VSBC Dispute Resolution Officer the landlord agreed to cap the outgoings at $7,000 per annum.
Leasing rights and responsibilities
For more information, see our hub of guidance on leasing rights and responsibilities.
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