Landlords…You need to know what can you recover in your outgoing costs?
This article is about the good the bad and the ugly regarding the recent changes to the Retail Shop Legislation and outgoings.
Your Leases MUST clearly state the expenses to be paid by the Tenant such as advertising, insurance costs and repairs and maintenance. You need this to be crystal clear to ensure on time payments and avoid costly disputes with Tenants. It is important your rights and obligations are protected when it comes to recovering outgoings to ensure you get back everything you can.
Each year you MUST provide the Tenant with an annual outgoings estimate stating what you are going to recover from them. You MUST break down each expense except when it is less than 5% of the total expense. At the end of each year you MUST provide an audited outgoings statement.
Your annual outgoings estimate and audited outgoings statement MUST include a breakdown of the estimated fees paid towards administration costs of running the centre and other fees paid to centre management.
Under recent changes to the Legislation, a Tenant can withhold outgoings payments if the Landlord’s outgoings estimate or audited outgoings statement is not provided as required. So it is very important these requirements are adhered to.
The area apportionment calculation of the outgoings used must exclude those parts of the common area leased or licensed for certain prescribed purposes. These purposes are information/entertainment/leisure facilities, ATMs, vending machines, advertising displays, seating areas, trade out areas, storage areas and parking areas.
Remember you cannot charge as part of outgoings; land tax, capital costs, depreciation, sinking fund contributions, insurance premiums for loss of profit, contributions to merchant associations or interest charges on amounts borrowed. It makes good business sense to have your leases reviewed by a Retail Leasing Lawyer to make sure you are recovering all your outgoings.
If you have any questions about leasing your premises please call me, Peter Lee, 3186 6666 for an obligation free conversation.