ACT
See section 70. The landlord may only recover from the tenant:
- a reasonable expense directly related to the operation of, or a reasonable expense of repairing or maintaining:
- for shopping centre premises - an area used in connection with the retail area of a shopping centre that contains the premises; or
- in any other case - the building that contains the premises;
- rates, taxes, levies or other statutory charges payable by the landlord;
- in relation to shopping centre premises - the reasonable cost of promoting the premises or centre; and
- an outgoing or expenditure incurred in obtaining statistical information.
See section 71. The tenant must pay an amount to the landlord for outgoings only if:
- the nature of the outgoings was stated in the DS; and
- the lease states:
- the outgoings that may be recovered by the landlord;
- how the amount of the outgoings will be worked out and apportioned to the tenant;
- how the outgoings or part of them may be recovered from the tenant; and
- the outgoings are "recoverable outgoings" (as defined under section 70).
NSW
See sections 3A, 12A.
Section 12A. The tenant is not liable to pay any amount to the landlord in respect of outgoings, unless the liability to pay the amount was disclosed in the landlord's DS.
If the landlord's DS provides an estimate of an outgoing and that outgoing is less than the actual amount and there was no reasonable basis for the landlord giving the estimate then the tenant's liability is to be determined on the basis of the landlord's estimate of the outgoing (not the actual amount).
NT
See section 38. The tenant is not liable to pay outgoings unless the lease specifies the outgoings that are recoverable, how the amount of those outgoings will be determined, how they will be apportioned to the tenant, and how those outgoings may be recovered by the landlord from the tenant.
Costs associated with the advertising or promotion of a retail shop or retail shopping centre, or of a business carried on there, are not considered to be outgoings for the purposes of section 38.
QLD
See sections 7 and 37. The type of outgoings to be charged must accord with provisions of the Act. The lease must specify how outgoings are to be paid, determined, apportioned and recovered.
See section 24. A lease cannot contain a provision requiring the tenant to make payments other than for the items listed, including rent and the landlord's outgoings or a specified part of such outgoings.
See section 53A. There is a limit on the landlord's recovery of outgoings incurred outside core trading hours.
SA
See section 26. The tenant is not liable to pay outgoings unless the provisions of the lease specify:
- the outgoings that are to be regarded as recoverable;
- how the amount of outgoings will be determined and apportioned; and
- how the outgoings may be recovered by the landlord.
Costs associated with the advertising or promotion of a retail shop or retail shopping centre are not outgoings for the purpose of this section of the Act.
Note: Refer to section 30 regarding restrictions on land tax.
See section 13. Capital expenditure is not recoverable and a provision to the contrary is void except:
- a tenant may be required to reimburse the cost of making good damage to the premises arising when the tenant is in possession of the premises;
- a tenant may be required to fit the shops or provide fixtures, plant or equipment if the DS discloses the obligation and estimates the cost; and
- a tenant may be required to contribute to a sinking fund to cover major items of repair or maintenance if reasonable details are disclosed in the DS.
A provision requiring a tenant to make or reimburse capital expenditure is void unless it is a "permissible" obligation (as described above).
A tenant cannot be required to compensate the landlord for depreciation attributable to ordinary wear and tear.
TAS
See section 18. The landlord may require the tenant to contribute to outgoings and major items of repair and maintenance that are directly attributable to the operation of the premises. The lease must state in detail which outgoings are recoverable and how unforeseen outgoings are to be dealt with, the method used to calculate outgoings, and the time for payment of the outgoings.
VIC
See section 39. The lease must specify recoverable outgoings, how the outgoings are to be determined and apportioned to the tenant, and how those outgoings may be recoverable by the landlord from the tenant.
"Outgoings" are defined in section 3, and include the cost, or part of the cost, of repairs or maintenance work in respect of an essential safety measure or an installation relating to fitout which the tenant has agreed to pay.
WA
See section 12.
The tenant is not liable to pay an amount in respect of the landlord's "operating expenses" except to the extent that the retail shop lease specifies:
- the items of operating expenses that are to be regarded as recoverable wholly or in part from the tenant;
- how the amount of an operating expense will be determined and, where applicable, apportioned to the tenant; and
- how and when an amount payable by the tenant is to be paid by the tenant,
and in any event the tenant's proportion of operating expenses cannot be greater than the "relevant proportion" without the approval of the WA SAT.
The "relevant proportion", in relation to a retail shop that is part of a "group of premises", is the proportion that the "lettable area" of the retail shop bears to the "total lettable area" of the group of premises at the commencement of the accounting year, with the overriding requirements that:
- a tenant of a retail shop in a group of premises is not liable to contribute to costs which are not specifically referable to that shop; and
- regard is to be had only to those premises that benefit from the expense in calculating the proportion.
The "lettable area" - is the area of a retail shop defined or calculated:
- in such manner prescribed by the Regulations [Note there has been no prescription yet but landlords generally apply the PCA method of measurement]; and
- if the shop is part of a "group of premises" in the same or substantially the same way for all retail shops in the group.
The concept of a "group of premises" means either:
- an RSC; or
- 2 or more premises at least 1 of which is a retail shop that are adjacent to each other or form a cluster and which:
- have a common head lessor; and
- are grouped together for the purpose of allocating to each of those premises a portion of an item of expense, and includes any part of the group.
"Total lettable area" is defined in the Act to mean the aggregate of:
- the lettable areas of the premises that are retail shops (or set aside for retail shops); and
- for any premises that are not retail shops, the lettable area of those premises defined or calculated in such manner prescribed by the Regulations.
There is no requirement for operating expenses to be reasonably and properly incurred in order to be recoverable from the tenant (unless the retail shop lease itself contains that requirement).
Under section 12(1)(c), the landlord cannot require a tenant (under a retail shop lease of premises which forms part of a group of premises) to contribute to operating expenses outside the "standard trading hours", if the tenant did not open for trade outside the standard trading hours. "Standard trading hours" are the hours prescribed from time to time under the Regulations.
Definitions and currency