What Is an Outgoings Reconciliation?
An outgoings reconciliation is the annual process of comparing the estimated outgoings a commercial tenant paid throughout the lease year against the landlord’s actual expenditure. If the tenant overpaid, they receive a credit or refund. If the landlord spent more than estimated, the tenant pays the shortfall.
When Does the Outgoings Reconciliation Need to Be Done in NSW?
In New South Wales, outgoings reconciliation timing is governed by the Retail Leases Act 1994 (NSW) for retail leases, and by the specific terms of the lease agreement for non-retail commercial leases.
Retail Leases in NSW
Under the Retail Leases Act 1994 (NSW), landlords must provide tenants with an annual outgoings statement within three months after the end of each lease year. This statement must detail:
- The actual outgoings incurred during the year
- The estimated outgoings the tenant paid
- Any adjustment amount owed by or to the tenant
If the landlord fails to provide this statement within the three-month window, the tenant is not required to pay any shortfall for that period.
Non-Retail Commercial Leases in NSW
For commercial leases that are not retail (such as industrial, office, and warehouse properties), the reconciliation timeline is dictated by the lease agreement itself. Most commercial leases in NSW specify that reconciliation must be completed within 90 days of the end of the financial year or lease year.
Common timeframes in standard NSW commercial leases include:
- Within 90 days after the end of the financial year (most common)
- Within 3 months after the lease anniversary date
- As specified in the lease’s outgoings schedule
What Outgoings Can Be Charged in NSW?
Outgoings that can typically be recovered from commercial tenants in NSW include:
- Council rates and water rates
- Land tax (in some leases)
- Building insurance
- Common area maintenance and cleaning
- Property management fees
- Repairs and maintenance of common areas
- Fire safety compliance costs
- Security costs
Landlords cannot pass on capital expenditure, depreciation, or costs related to structural defects to tenants in retail leases under NSW law.
What Happens If the Reconciliation Is Late?
For retail leases in NSW, if a landlord does not provide the reconciliation statement within three months, tenants are legally protected from paying any additional amount owed. For non-retail leases the consequences depend on the lease terms. Most leases still allow recovery of shortfalls even if the statement is late, but the clause should be reviewed carefully.
Need Help With Your Outgoings Reconciliation?
BLOX Commercial manages outgoings reconciliation for over 180 commercial properties across Sydney. Our property managers handle the full reconciliation process: calculating actuals, preparing statements, tenant communication, and dispute resolution.
Call us on (02) 8883 4559 or get in touch online for expert commercial property management advice.