What are Outgoings in a Commercial Lease?

Property Law: 08 April 2024

Author: Lauren Woolley & Ralph Davies - Our People

Outgoings in a commercial lease are payable by the tenant. However, a landlord cannot pass on all expenses to a tenant.

If the premises is classified as a retail lease, the landlord is prohibited from passing off certain outgoings to the tenant – such as land tax, cost of capital improvements and any expenses that do not benefit the premises. The Retail Leases Act 2003 also provides that a tenant in a retail lease is not liable to pay outgoings except where they have been provided with an estimate of outgoings before the lease is entered into, and one month prior to the landlord’s accounting periods (e.g. each year).

There is no statutory safety net for commercial leases with respect to payment of outgoings. Therefore, it is crucial as a landlord and tenant that these outgoings are disclosed by the landlord and the tenant is aware of their obligations to pay outgoings.