What's involved when renting a Commercial Property

Outgoings in a Commercial Lease

In Western Australia, commercial real estate is regulated by the Commercial Tenancy (Retail Shops) Agreements Act 1985 which only applies to retail leases with a lettable area of 1000 m2 or less. For these leases, there is a prohibition on charging management fees. With larger commercial leases there is no directly applicable legislation and all outgoings are payable by the Lessee (unless otherwise negotiated) as part of any new lease agreement.

For the majority of commercial leases, it is the Lessee's responsibility to pay all outgoings for a property including property management fees, but not including works that are of a structural or capital nature.

Outgoings that are recoverable from a tenant can include (but not limited to):

- Council Rates
- Water Rates & Consumption
- Land Tax (single ownership basis)
- Strata Levies (where applicable)
- Insurance
- Repairs & Maintenance
- All Managing Agents Fees

There are two ways in which outgoings can be recovered from a Lessee:

- On demand - As and when costs arise, they are invoiced directly to the Lessee to pay via the managing agent, or
- Outgoings budget - The managing agent estimates the annual outgoings payable and the Lessee pays this via equal monthly installments with their rent. The outgoings are reconciled at the end of each financial year. under the Commercial Tenancy (Retail Shops) Agreements Act 1985 the outgoings reconciliation must be audited by an external auditor on or before the 30th September, each financial year.

If you would like further information about any aspect of commercial leases, click here: https://mlv.com.au/contact

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