For landlords, outgoings are rarely as straightforward as they first appear. Even outside the Retail Shop Leases Act 1994 (Qld) (RSLA), outgoings are one of the more common points of contention between landlord and tenant, and landlords typically rely on the wording of the lease itself to determine what can be claimed back.
Where a lease falls within the definition of a retail shop lease, it is governed by the RSLA rather than general commercial lease principles, and this distinction matters. What is often underestimated is how tightly the Act itself controls this process, both in what can be recovered and how it must be administered. A clause that has sat unchanged in a lease for years, or one carried over from a standard commercial template, can make the landlord assume all its outgoings are recoverable from the tenant.
Outgoings Landlords Can Recover
Generally, a landlord is entitled to recover the genuine costs of operating, maintaining and repairing the centre. This includes council rates, water, cleaning, security, and centre management costs, apportioned fairly among tenants, typically by lettable area. Interest on arrears of rent or outgoings can also be recovered in limited circumstances, as can a landlord’s reasonable legal costs in responding to certain tenant requests.
This list is broader than many landlords assume, provided the costs are genuine, properly apportioned, and administered in line with the Act’s requirements. The difficulty tends to arise not in what falls within this category, but in landlords assuming it extends further than it actually does.
Outgoings Landlords Cannot Recover
The Act draws firm boundaries around what a landlord can require a tenant to pay, regardless of the lease’s wording. Land tax cannot be recovered from a retail tenant in Queensland, even where the lease attempts to characterise it differently. Key money and payments for goodwill are prohibited outright. Capital costs, such as structural repairs or building improvements, sit outside ordinary outgoings, as does insurance covering a landlord’s own loss of profits.
Where any of these costs are claimed from a tenant, that claim cannot stand, and the Act’s position prevails regardless of what the lease says. Landlords relying on precedents drafted for other states, or leases that predate more recent amendments, should treat this as a priority item to check.
The Annual Estimate and Audited Statement Are Where Recovery Is Most Often Lost
Outgoings dispute rarely turn on whether a cost itself was reasonable. They turn on whether the landlord met the Act’s procedural requirements in claiming it.
A landlord must give tenants a written estimate of apportionable outgoings for the coming year, in the approved form, before that year begins. Following the year’s end, an audited statement comparing the estimate against actual expenditure must be provided within three months. Where either step is missed, delayed, or provided in a non-compliant form, a landlord’s ability to recover outgoings for that period can be compromised, regardless of how legitimate the underlying costs were.
This is a documentation and timing issue as much as a legal one, and it is often where otherwise well-run centres come unstuck.
Sinking Funds and Marketing Levies Sit Outside Ordinary Outgoings
Major maintenance and repair costs are treated differently from standard outgoings where a sinking fund applies, and landlords should avoid folding sinking fund contributions into a general outgoings estimate without distinguishing between the two.
Marketing and promotion levies carry their own precondition. Before tenants can be asked to contribute, a marketing plan must be prepared and provided to them. A levy charged without this step in place is vulnerable to challenge, however reasonable the underlying marketing spend may be.
A Practical Perspective for Landlords
Understanding what can and cannot be recovered is not about anticipating every possible dispute. It is about confirming that what you are currently claiming from tenants, and how you are administering that claim, will hold up if it is ever questioned.
A useful test is whether your current outgoings recovery, and your estimate and statement process, would withstand scrutiny today. For many landlords, that reflection points to costs being claimed that shouldn’t be, or entitlements being left unclaimed altogether.
How Ardor Legal Assists Landlords with Retail Shop Lease Outgoings
At Ardor Legal, we work with landlords in preparing retail shop leases, ensuring disclosure is complete and compliant, and advising on obligations under the RSLA, including outgoings. Our role is to make sure your lease and your disclosure documents correctly reflect what can be recovered, and that your estimates and statements meet the Act’s requirements from the outset.
If you would like assistance preparing a retail shop lease or reviewing your outgoings arrangements, we welcome a conversation.
Schedule a complimentary 15-minute consultation with one of our experienced leasing lawyers to discuss your retail shop leases and how we can help.
Frequently Asked Questions (FAQs)
Can a landlord claim land tax back from a retail tenant in Queensland?
No. Land tax cannot be recovered from a retail shop tenant in Queensland under the Retail Shop Leases Act 1994, even if a lease attempts to describe it as a different type of cost.
What outgoings can a retail landlord recover from a tenant?
Generally, a landlord can recover genuine costs of operating, maintaining and repairing the centre, such as council rates, water, cleaning, security and centre management, apportioned fairly among tenants. Interest on arrears and reasonable legal costs for certain tenant requests may also be recoverable in limited circumstances.
What happens if a landlord doesn’t send tenants an annual outgoings estimate?
If a landlord fails to provide a written annual estimate of apportionable outgoings in the approved form, or provides it late, their ability to recover outgoings for that period may be affected, regardless of whether the underlying costs were reasonable.
Can a retail landlord charge tenants for marketing costs?
Only if a marketing plan has been prepared and given to tenants beforehand. A marketing levy charged without a marketing plan in place is vulnerable to challenge.
Are sinking fund contributions treated as outgoings?
No. Sinking fund contributions for major maintenance and repairs are treated differently from standard outgoings and should be dealt with separately in a landlord’s estimates and statements.
