What are outgoings?
Outgoings are expenses related to a rented shop that the tenant has agreed to pay in addition to the rent.
The lease and the lessor’s disclosure statement must clearly specify the outgoings that the tenant has to pay.
Outgoings are a major cost for the tenant. Before you sign the lease, you need to understand these costs and make sure you can afford them.
Some examples of outgoings include management fees, operation costs, cleaning and repairs; and rates, taxes and levies, in some cases. Some outgoings may be paid several times during the year, others after the end of the financial year.
What are outgoings?
The Retail Leases Act 1994 says that outgoings must be:
- meaningfully disclosed
- directly and reasonably related to the shop that is leased, and
- related to the management, operation, maintenance or repair of the building or shopping centre where the shop is located. This disclosure gives you an idea of the costs of the outgoings, which can go up by market rates over time.
Statements of expenses
The landlord must give you estimates of the expenses (outgoings) for the following year before the end of the financial year and then audited statements within three months of the end of the financial year. At that time you either need to pay costs that were higher than the estimates or receive a refund.
Some statements don’t have to be audited if there are limited outgoings and you’re given a copy of the statements, assessments or receipts.
If you don’t receive your statements or estimates, write to the landlord and ask for them. If the landlord doesn’t provide them within 10 business days of your request, you can stop paying outgoings until you receive the statements.
Once the landlord has provided them, you need to pay the withheld outgoings within 28 days.
This process of notice, withholding and repayment also applies when tenants need to ensure that a landlord provides marketing plans and statements.