Insights

Key takeaways

• Outgoings are recoverable costs for landlords like rates and insurance.
• Net leases load costs onto tenants, gross leases load risk onto owners, while semi-gross leases shares increases fairly.
• In Brisbane, Aegis provides expert outgoings management to help landlords maximise returns and safeguard their investment, while keeping tenants happy.

Outgoings may seem like a technical detail, but they play a big role in assessing the true cost and value of any commercial lease. For Brisbane and Queensland owners, being clear about how these costs are shared is both smart business and a legal must.

Definition of outgoings

 Outgoings are the day‑to‑day costs of owning and running a property that landlords can pass on to tenants — essentially, what tenants pay on top of rent for building operational expenses.

In residential leases, these costs are usually small, like water or shared utilities. But in commercial leases, especially in Queensland, they can include property management fees, council rates, air conditioning maintenance, insurance, common area cleaning and land tax.

For retail leases, though, landlords generally can’t charge land tax, so it’s important to know the rules and structure the lease accordingly.

Typical costs included

Common recoverable outgoings in Brisbane commercial leases include:

• Property management fees
• Council and water rates
• Land tax (for non‑retail commercial)
• Building insurance and public liability
• Body corporate fees and sinking fund contributions (for strata complexes)
• Building services and plant maintenance
• Building maintenance that isn't fair wear and tear (such as servicing air conditioning and heating systems)
• Common area cleaning, landscaping, waste removal and security
• Common area electricity, gas and other shared utilities

These costs should be clearly broken down and backed by detailed schedules so both parties have full transparency.

Costs that cannot be passed on

Some costs can’t be passed on to tenants and must stay with the owner. These include any capital items or major upgrades like new lifts or HVAC systems, structural improvements, financing costs and internal overheads unrelated to running the building.

Works that increase a property’s value — not just maintain it — must be kept separate from routine outgoings.

Aegis helps owners get this balance right by classifying outgoings correctly, recovering what’s allowed, and ensuring leases are clear and compliant with Queensland law.

Lease Types and Their Impact on Outgoings

Outgoings are outlined in the lease contract and disclosure statement. They are dependent on lease type and are negotiable — except those prohibited by law.

Net Lease – Tenant Covers All Outgoings

In a net lease, tenants pay base rent plus all outgoings, like council rates, insurance and cleaning. In a Brisbane CBD office building — like some in the Riverside Centre precinct, for example — a tenant might foot the full operating bill.

Tenants often resist this structure due to limited cost oversight and the large end-of-year lump sum payment method, which complicates budgeting and cash flow.

 Gross Lease – Landlord Covers Outgoings

Known as a “gross gross” lease in Brisbane, tenants pay one fixed rent, with landlords absorbing all outgoings from that income.

Owners dislike this lease structure because increases aren’t covered by the Tenant. For instance, like council rates or insurance, erode profits, even with yearly rent hikes. But tenants like the predictability.

Semi-Gross Lease – Shared Outgoings

Semi-gross leases use a base outgoings year model and are common in districts across Brisbane, like the CBD, Fortitude Valley and South Bank.

Tenants cover all outgoings up to a fixed "base year" amount (typically year one), plus their proportional share of any increases above that baseline in subsequent years.

This structure adds the base rent plus only the escalation of extras (taxes, insurance, maintenance) that exceed the initial year's budget.

It is often considered the fairest option: tenants benefit from transparent forecasting and low risk on the base amount, while owners are protected by recovering all legitimate cost increases.

Why the Base Year Matters

The base year is typically the lease’s first year, which sets a fixed outgoings schedule against which all future costs are indexed.

Tenants then pay their proportional share of any increases. For example, a tenant leasing 10% of a building pays 10% of any rise. So, if outgoings jump from the $1 million base to $1.2 million, the tenant pays 10% of the $200,000 difference, or $20,000.

Managing Outgoings for Net Income and Tenant Satisfaction

Smart outgoings management maximises recoverable costs to boost net income, keeps tenants satisfied with fair and predictable charges, and funds vital maintenance to extend building life.

In Brisbane's stabilising market — with rising investor confidence and office recovery — professional oversight ensures outgoings align with rising values, keeping properties competitive.

Budgeting, Reconciliations and Transparent Reporting

Property managers deliver annual outgoings budgets, year-end actual-vs-budget reconciliations and clear breakdown reports.

For Brisbane landlords facing upgrades or new supply pressures, this transparency minimises disputes, ensures predictable cash flow, and keeps compliance on track.

Clear Lease Terms and Proactive Processes

Aegis builds strong outgoings clauses into leases, conducts regular audits for accurate cost allocation, and sets proactive maintenance schedules to manage expenses.

In Brisbane's buzzing office market, where premium buildings secure stronger deals, this approach minimises surprises, fosters tenant trust and keeps assets looking sharp.

Best Practice Checklist for Landlords

• Confirm building grade and condition
• Check recent vacancy rates and tenant mix
• Forecast rises in outgoings (rates, insurance trends)
• Lock in audit rights and reconciliation clauses
• Match lease terms to market (three to five years is typical in Brisbane)
• Clearly document base year outgoings for semi-gross leases

Choose expert outgoings management

 Understanding and managing outgoings in commercial leases maximises returns and reduces risk.

In Brisbane’s evolving market — where vacancies are declining, investor interest is rising and demand for premium buildings is growing — Aegis delivers precise outgoings management that protects net income, ensures full cost recovery and funds proactive maintenance.

This smart oversight preserves long-term asset value and prevents disputes, keeping properties competitive and cash flows steady.

Contact Aegis Property Management today for expert advice tailored to Queensland commercial leases.

 Contact us today for a free property management consultation