NSW Retail Lease Outgoings: What Landlords Can and Cannot Charge You For

Pelagio Palma Jr., BA, LLB, LLM, MBA
May 25, 2026
Estimated reading time: 7 mins

NSW retail lease outgoings are one of the most misunderstood aspects of a retail tenancy agreement in New South Wales.

Entering into a retail lease is a major step for many business owners. While rent is often the main focus during negotiations, another important cost is frequently overlooked: retail lease outgoings. These additional expenses can have a significant impact on a tenant’s overall budget and ongoing operating costs.

Although most tenants are aware that outgoings exist, many sign their lease without fully understanding what these costs cover or, more importantly, what a landlord is legally permitted to charge. This lack of clarity can lead to tenants paying expenses they may not actually be required to bear under the lease.

What Are Outgoings in an NSW Retail Lease?

In the context of a retail lease, outgoings refer to the operating and maintenance costs of a commercial property that a landlord seeks to recover from their tenants. In other words, outgoings are costs beyond the base rent that a tenant may be required to contribute toward under the terms of their lease.

Common examples of outgoings in NSW retail leases include:

Council rates and water charges
Building and public liability insurance premiums
Common area maintenance and cleaning costs
Security and fire safety services
Property management fees
Sinking fund or capital works levies

It is important to understand, however, that not all of these costs are automatically recoverable from tenants. The Retail Leases Act 1994 (NSW) places clear limits on what landlords may legitimately charge.

Are Tenants Required to Pay Retail Lease Outgoings in NSW?

The answer depends on the lease terms and the requirements under the Retail Leases Act 1994 (NSW). Importantly, a tenant is generally only required to pay outgoings if:

The lease specifically states the outgoing is payable; and
The landlord properly discloses the outgoing before the lease commences.

Furthermore, landlords must provide a Disclosure Statement outlining expected costs and financial obligations. If an outgoing was not disclosed properly, the tenant may have rights to challenge those charges. Therefore, tenants should never assume all building-related expenses automatically become their responsibility.

What Does the Retail Leases Act 1994 (NSW) Say About Outgoings?

The Retail Leases Act 1994 (NSW) (the Act) provides significant protections for retail tenants in New South Wales. In particular, the Act imposes strict disclosure obligations on landlords and restricts the types of outgoings that can be passed on to tenants.

First and foremost, landlords are required to provide tenants with a detailed estimate of outgoings at the beginning of each year. This estimate must set out the types of outgoings and the estimated amounts for the year ahead. Additionally, at the end of each year, the landlord must provide a reconciliation statement showing the actual outgoings incurred. If the actual costs were lower than estimated, the tenant is entitled to a refund or credit for the difference.

These requirements are designed to ensure transparency and to prevent landlords from using outgoings as a mechanism to extract additional, unbudgeted income from tenants.

Outgoings That Landlords Can Charge Tenants in NSW

Under the Act and the terms of a well-drafted lease, landlords in NSW may generally recover the following categories of outgoings from retail tenants, provided they are clearly disclosed and reasonably incurred:

Council rates and water rates proportionate to the tenant’s occupancy
Insurance premiums for building and public liability insurance (but not the full premium if the building has multiple tenants)
Common area maintenance costs, including cleaning, lighting, and landscaping
Security services attributable to the common areas of the premises
Energy costs for common areas such as car parks and lobbies

Even so, the ability to recover these costs depends entirely on whether the lease agreement expressly provides for their recovery. Consequently, tenants should always have a solicitor review their lease to confirm precisely which outgoings they are liable for before signing.

Outgoings That Landlords Cannot Charge Tenants in NSW

The Retail Leases Act 1994 (NSW) also expressly prohibits landlords from recovering certain costs from retail tenants. Understanding these exclusions is essential, as some landlords may attempt to include prohibited charges in lease agreements.

Under section 12 of the Act, landlords cannot pass on the following costs to retail tenants:

Land tax — this is a cost borne exclusively by the landowner and cannot be charged to a retail tenant under any circumstances
Capital expenditure costs — costs associated with structural improvements, major renovations, or capital works that are the landlord’s responsibility
Costs of obtaining or renewing the lease itself, including the landlord’s legal fees
Depreciation of the building or its plant and equipment
Costs that relate exclusively to other tenancies within the same building

It is worth noting that even if a lease agreement purports to include these charges, those provisions may be unenforceable under the Act. Therefore, if you are being asked to pay any of these costs, it is strongly advisable to seek legal advice promptly.

4 Tips on How Tenants Can Reduce Retail Lease Risks

Although retail lease outgoings are common, tenants can take practical steps to reduce risk before signing. Here are some steps to keep in mind:

1. Review the Disclosure Statement Thoroughly

Businesses should not base their decision solely on the rental amount. All disclosed outgoings should be carefully reviewed to assess their potential annual financial impact. In some cases, premises with lower rental costs may carry higher operational and occupancy expenses.

2. Request Clarification on Shared Expenses

Businesses should seek clarification from the landlord regarding the calculation and allocation of common area expenses and shared costs. Where possible, requesting historical expense records or previous annual cost examples may provide greater transparency and visibility over future financial obligations.

3. Understand Repair and Maintenance Obligations

Repair and maintenance responsibilities between the landlord and tenant should be clearly established before entering into the agreement. Clarifying these obligations upfront may help minimise unexpected expenses and potential disputes during the lease term.

4. Obtain Legal Advice Prior to Execution

Retail leases are legally binding agreements that may involve significant financial and operational commitments. Obtaining professional legal advice prior to signing may assist in identifying potential risks, clarifying obligations, and negotiating more favourable lease terms. Professional review at the outset may help minimise future disputes and reduce unforeseen costs.

Navigate NSW Retail Lease Outgoings with VC Lawyers

Retail lease outgoings are an important consideration for any business entering a retail tenancy in NSW. Although some expenses may legitimately be passed on to tenants, landlords must comply with disclosure requirements and legal obligations under NSW retail leasing legislation. Therefore, understanding what costs apply, what protections exist, and what cannot be charged is essential before committing to a lease.

At VC Lawyers, our team assists businesses and tenants in reviewing retail and commercial leases, identifying risks, and helping clients make informed decisions before signing agreements. If you are entering a retail lease or need advice regarding lease obligations, seeking professional guidance early can help protect your business interests.

Contact VC Lawyers today to obtain professional guidance and navigate retail lease obligations with confidence.