Commercial Tenancy Agreements (CTA) and Outgoings: The One Line in Your Lease That Could Be Costing You Thousands

If you’re a landlord, investor or asset manager and you’ve been told your tenant (who's on a CTA) pays “100% of outgoings”... let me ask you this:

Have you checked the actual lease?

Because I’ve lost count of how many times I’ve seen commercial tenancy agreements that say 100% recoverable, but the fine print tells a very different story.

The truth?

CTA's (Commercial Tenancy Agreements) have Outgoings sections that misunderstood, misused, and more often than not poorly filled out. And it’s costing landlords tens of thousands every single year.

The Dangerous Assumption: “100% of Outgoings” Means Everything Is Recoverable

Here’s a real scenario I’ve handled more times than I’d like:

A landlord buys a commercial property.

The agent says the tenant pays “100% of outgoings.”

Everyone high-fives and pops the champagne.

Then, when I take over the management and go to reconcile the first year’s outgoings, I have to break the news:

"Sorry, we can't recover the management fees"

"Sorry, gardening and grounds care aren't recoverable"

"Sorry, Fire compliance? Also excluded."

Why?

Because in the Commercial Tenancy Agreement (CTA), the Terms & Conditions don’t list those items and the boxes weren’t ticked. The language wasn’t there. And no one noticed before it was signed.

Now the lease is locked in.

The tenant is 100% within their rights.

And the owner is bleeding cash every year.

What Are Outgoings in a Commercial Tenancy Agreement?

Let’s break it down so there’s no confusion.

Outgoings are the recoverable property expenses a landlord can charge to a tenant - on top of rent.

They typically include:

  • Council rates
  • Water and sewerage
  • Land tax (in most non-retail leases)
  • Building insurance
  • Repairs and maintenance
  • Cleaning
  • Security
  • Fire services
  • Property management fees
  • Gardening and landscaping
  • Sinking funds or strata levies

But here’s the kicker:

You can only recover what’s clearly allowed in the lease.

Even if the front page of the agreement says “Tenant pays 100% of outgoings,”

Even if you assumed it meant “everything.”

Even if the selling agent said, “It’s all included.”

Why the Fine Print Matters More Than the Cover Sheet

In a CTA, there’s often a box or a sentence that says something like:

Outgoings: 100% recoverable by the landlord.

Sounds airtight, right?

Wrong.

Because the legally enforceable part of the lease - the Terms & Conditions - often includes:

  • An outdated or incomplete list of recoverable items
  • No mention of specific costs like management, security or landscaping
  • Language that restricts recover to "statutory charges only"

So when you try to recover fire testing costs, or invoice for property management, your tenant pulls out the lease and says, "Not covered. Not paying".

And legally? They’re right.

Real Cost of a Poorly Written Outgoings Clause

Let’s run the numbers on what these missed outgoings might cost you annually:

Outgoing

Annual Cost

Property Management Fees

$5,500

Fire Compliance Testing

$2,000

Grounds & Gardening

$3,000

Pest Control & Waste

$1,200

Bi-annual Property Inspections

$800

Total Missed Recovery

$12,500+

Over a 3-year lease, that’s $37,500 left on the table - for one property.

Multiply that across a portfolio? You’re burning six figures.

How to Structure A Commercial Tenancy Agreements Outgoings the Right Way

This isn’t about charging tenants unfairly - it’s about making sure your lease backs you up when you recover legitimate costs.

Here’s how to lock it down:

1. Spell It Out in the Lease

Don’t rely on the "100% Outgoings" line.

Instead, make sure all the boxes beneath it are ticked. Terms & Conditions clearly define:

If it's not ticked, it's not recoverable.

2. Align It With Retail Lease Laws (If Applicable)

Heavens to Betsy, if you have a retail tenant... do not use a CTA. Use a RTA or engage a solicitor to draft a proper lease. If you put a retail tenant on a CTA... good luck to you.

3. Include All Operational Costs

Make sure your lease mentions (you can even add it to the Special Conditions/Annexure page:

  • Management fees
  • Admin & reporting costs
  • Roller Door maintenance
  • Air Con maintenance
  • Gardening & grounds
  • Essential services (fire, security, pest)
  • Insurance (and who pays what) 

And make sure it’s not just in the Disclosure Statement - it needs to be in the actual lease. Both documents need to outline Outgoings.

Real Case Study: The “100%” That Meant Nothing

A commercial landlord bought a brand new industrial asset in South East QLD with a rental guarantee from the developer.

Lease said: “Tenant to pay 100% of outgoings.”

Owner hands me the lease expecting me to recover everything.

Wrong.

After the lease was reviewed post-sale:

  1. None of the checkboxes were ticked
  2. Maintenance and itemised outgoings: not mentioned in the special conditions/annexures as a backup

We calculated $14,000 per year in non-recoverable expenses.

The Sales contract allowed the developer to find a tenant and as long as it was the same deal or better the Landlord had to accept it or forfeit rental funds.

Developer found a tenant for 3 years.

Over the remaining 3 years of the lease, that was $42,000 in lost profit.

Could it have been avoided?

Yes - if the lease had been reviewed before signing or settlement.

Why You Need a Property Manager Reviewing Your CTA - Before It’s Signed

This is the part most landlords miss.

Lawyers understand the legal structure.

Agents focus on the sale.

But property managers live in the outgoings. We breathe the detail. We see where things go wrong - daily.

So before you sign or accept a lease:

Get your future property manager to review the Commercial Tenancy Agreement - especially the outgoings section.

Because:

  1. We know what gets overlooked
  2. We know what matters in enforcement
  3. We know how to structure it for long-term income protection

The Checklist: Questions Every Landlord Should Ask Before Accepting a Lease

  1. Is the list of recoverable outgoings specific and complete?
  2. Does the lease comply with Retail Lease laws (if applicable)?
  3. Are non-statutory costs (like management, maintenance of fixtures and cleaning) included?
  4. Are there clear mechanisms for reconciliation and adjustments?
  5. Is the tenant aware and in agreement about the charges?
  6. Has my property manager reviewed and approved the lease structure?

If you can’t confidently answer “yes” to all of these - your outgoings are at risk.

Final Word on Commercial Tenancy Agreements and their Outgoings

“100% of outgoings” means nothing without clear lease language to back it up.

And if that language isn’t locked down before the lease is signed, you’re exposed for years.

So if you’re:

  1. About to buy a commercial property
  2. Negotiating a new lease
  3. Handing over to a new manager
  4. Or just want to know you're not bleeding cash....

Get your Commercial Tenancy Agreement reviewed.

You might discover your lease is working against you and costing you thousands.

Want Me to Review Your Lease?

I’ll audit your outgoings clauses and tell you:

  1. What's recoverable
  2. What's missing
  3. What needs fixing and how to do it legally

👉 Click here to book a lease review →

No BS. Just answers that protect your income.

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