What are outgoings in a commercial lease?
Outgoings are the landlord’s costs of owning and operating the building that the tenant contributes to, usually on top of the rent. Common examples are council rates, water charges, building insurance, cleaning and maintenance of common areas, fire safety services and owners corporation fees. A gross rent already includes them; a net rent has the tenant’s share added. The lease says which.
Under the Retail Leases Act 2003 (Vic), “outgoings” means the landlord’s expenses directly attributable to operating, maintaining or repairing the building and associated areas, and rates, taxes, levies, premiums or charges it pays as owner or occupier (s 3).
Retail leases: only what the lease specifies
A retail tenant is liable for outgoings only under lease terms that specify which are recoverable, how they are worked out and apportioned, and how the landlord recovers them (s 39). The Regulations allow apportionment by lettable area: the premises’ share of the total lettable area of all premises that benefit. In a retail shopping centre, a tenant contributes to an outgoing benefiting particular shops only if its premises benefit, and then no more than its lettable area share (s 40).
These rules apply only to retail leases. See does the Retail Leases Act apply, and our Retail Leases Act guide for the rest of the Act.
Estimates, annual statements and audits
- Estimate (s 46). The landlord must give a written, itemised estimate of outgoings before the lease is entered into, and at least one month before each of its accounting periods. The tenant is not liable to contribute to an outgoing until it has been given the required estimate.
- Annual statement (s 47). Within 3 months after each accounting period ends, the landlord must give a written statement of all its expenditure on the outgoings, prepared under Australian accounting standards.
- Audit. The statement must come with a registered company auditor’s report on whether it correctly states the total and each outgoing over 10% of the total, and whether the estimate exceeded actual spending. The auditor must give the tenant a reasonable opportunity to make a written submission.
- No audit is needed where the statement covers only GST, water and sewerage charges, council rates, insurance, the fire services property levy and owners corporation fees, with proof of payment.
- Adjustment (s 48). Any underpayment or overpayment is adjusted within one month after the statement, or 4 months after the period ends, whichever is earlier, counting only expenditure properly and reasonably incurred.
Landlords: the estimate and the disclosure statement need to match the lease. See disclosure statements.
What a retail landlord cannot pass on
A retail lease term is void to the extent that it makes the tenant pay:
- capital costs of the building, the centre, associated areas or plant, except capital works the lease requires the tenant to carry out at its own cost, and some essential safety measure costs (s 41);
- depreciation (s 42), or contributions to a sinking fund for capital works (s 43);
- interest or other charges on the landlord’s borrowings (s 44);
- rent under a head lease, or rent and costs associated with other land (s 45); or
- the landlord’s land tax or commercial and industrial property tax (CIPT) (s 50). CIPT will not be assessed until the mid-2030s, but the ban applies to leases signed now.
Management fees
A management fee is recoverable only if it relates to managing the building or centre, and the lease or disclosure statement specifies the amount for the accounting period and a rate or method for working out the tenant’s share. Generally, the tenant’s share cannot rise from one accounting period to the next by more than Melbourne CPI, unless half the liable tenants in a shopping centre agree in writing (s 49).
Essential safety measures
Essential safety measures are defined in the Building Regulations 2018 (Vic) and include exit doors, smoke alarms, fire extinguishers, emergency lighting and sprinkler systems. The building owner must ensure they are maintained and must prepare an annual essential safety measures report.
Under a retail lease, a term may require the tenant to pay all or part of the cost of repairs or maintenance of an essential safety measure, or of a fit-out installation the tenant agreed to pay for, and these costs are outgoings (ss 3 and 41(2)). This has applied since 23 September 2020, including to earlier leases still in force then, for costs incurred from that date (s 122). A tenant who agrees to do the work does not take over the landlord’s obligations as owner under the Building Act 1993 (Vic) (s 52(6) and (7)).
Under s 251 of the Building Act, if an owner does not do work the Act or regulations require of it, the occupier may do it and recover the cost from the owner or set it off against rent, despite any agreement to the contrary. The exception is essential safety measure costs the occupier agreed to bear under a retail lease, or another non-residential lease in a retail shopping centre. For other office, warehouse or factory leases, a clause passing on these costs needs checking against s 251. For repairs generally, see the landlord’s repair obligations.
Offices, warehouses and factories
Where the Act does not apply, the lease decides which outgoings the tenant pays, how its share is worked out, and whether it receives estimates, statements or audits. Capital costs, land tax and CIPT can all be passed on if the lease says so. Land tax is assessed on the total taxable value of all the land an owner holds, so the lease should say how the tenant’s share is calculated, for example as if the premises were the landlord’s only land. Whether an existing “land tax” clause also covers CIPT depends on its wording. See is a warehouse or office lease a retail lease.
Checking your outgoings
- Compare the statement with the estimate and the lease.
- Check the lettable areas used, and whether your premises benefit from each item.
- Under a retail lease, look for void items: land tax, capital works, depreciation, sinking funds, borrowing costs.
- Ask for the auditor’s report, and make a written submission to the auditor if something looks wrong.
- Raise disputes promptly, in writing. Retail disputes usually go to mediation at the Victorian Small Business Commission first. See lease disputes.
How we help
- Reviewing outgoings clauses before you sign, as part of a lease review ($1,100 including GST ($1,000 + GST) for most leases).
- Checking estimates and statements, and recovering overcharges.
- For landlords: compliant outgoings clauses, estimates and statements.
- Disputes at mediation and VCAT. Start with a free 15-minute phone call.
Common questions
Can’t see your question? Call 1800 776 529 or send us a message.
The landlord’s running costs of the building, such as council rates, water charges, insurance, cleaning and fire safety services, that the lease requires you to contribute to. The lease says which you pay and how your share is worked out.
Not under a retail lease: a term making the tenant pay the landlord’s land tax or CIPT is void. Under an office, warehouse or factory lease outside the Retail Leases Act, land tax can be passed on if the lease says so.
Under a retail lease, the tenant is not liable to contribute to an outgoing until it has been given the estimate the Act requires. Under other leases, it depends on the lease.
The owner must maintain essential safety measures. A retail lease can make the tenant contribute to the cost of their repair and maintenance as an outgoing. Under other leases, check the clause against s 251 of the Building Act.
Law referred to
- Retail Leases Act 2003 (Vic) ss 3 (definitions of essential safety measure and outgoings), 39 to 50, 52(6) and (7) and 122.
- Retail Leases Regulations 2023 (Vic) regs 5, 9, 10 and 11.
- Building Act 1993 (Vic) s 251; Building Regulations 2018 (Vic) (essential safety measures).
- Commercial and Industrial Property Tax Reform Act 2024 (Vic) s 30.
Last reviewed: October 2026, by a Victorian solicitor with a current practising certificate. This page is general information about Victorian law as at October 2026. It is not legal advice about your lease.
Tell us about your lease
Send the form, or call. We reply within one business day, by phone, email or text, whichever you prefer.
What happens next
- Send the form.
- We reply within one business day.
- We arrange a time to talk, or ask for the lease and any other documents we need first.
Phone: 1800 776 529 (1800 PRO LAW)
Email: info@leaselawyers.com.au
Hours: Monday to Friday, 9 am to 5:30 pm
Office: 435 Nepean Highway, Frankston VIC 3199. We act across Victoria by phone, video and email.