Understanding Commercial Outgoings

Michael Chatfield · 11 May 2026

Outgoings are one of the most common sources of confusion - and dispute - in commercial leasing. If you're about to sign a lease, or you own a commercial property, understanding how outgoings work is essential to knowing the true cost or return of the deal. Outgoings are the running costs of the building. Council and water rates, insurance, strata levies where applicable, building maintenance, cleaning and lighting of common areas, fire safety servicing. They are what the owner spends to keep the place operating. Depending on how the lease is structured, none, some or all of it gets passed on to the tenant. So the first question on any deal is whether the lease is gross or net. Under a gross lease the rent covers everything and the owner wears the outgoings. Under a net lease the tenant pays rent plus a share of outgoings on top. There is a lot of ground in between, because a lease can pass on some categories and not others, and most of the leases we write sit somewhere in that middle. Every building is different and every deal is different, which is why this gets decided lease by lease rather than by a standard rule. It also means two properties advertising the same rate per square metre can cost very different amounts to occupy. If you are comparing options, you are not comparing anything useful until you know what each figure includes. Where a tenant pays a share, that share is generally worked out on area. Your lettable area divided by the lettable area of the building gives you a percentage, and that percentage is applied to the outgoings for the year. A tenant occupying a quarter of a building pays a quarter of the recoverable costs. The other thing worth understanding is that outgoings are normally charged during the year on an estimate, then squared up against what was actually spent once the year closes. If the estimate was low, there is a shortfall to pay. If it was high, there is money back. Most of the disputes we see start here, and almost all of them start with an estimate nobody explained at the beginning. There is one more distinction that matters. Retail shop leases in New South Wales sit under separate legislation that does not apply to offices, warehouses or industrial premises. It sets out what a landlord has to tell a prospective tenant about outgoings before the lease starts, and it restricts what can be recovered. Whether your premises is a retail shop for those purposes is not always obvious from the use, and it changes the answer to most of the questions above. If there is any doubt, get advice on it before you sign rather than after. None of this is complicated once it is laid out. It causes trouble because it usually isn't. Ask for the outgoings estimate and the last two years of actual figures before you commit to anything, and ask which categories the lease actually passes on. This is general information about how commercial outgoings work, not advice on your particular lease. If you are leasing, buying or letting commercial property on the Central Coast and want a straight answer on what a deal will really cost, call Central Coast Commercial on 02 4322 7000.