Depreciation, capital costs, charges incurred by landlord, etc

ACT

See section 70. The tenant can only be liable for "recoverable outgoings" and, under sections 76-77, a lease provision is void if it requires the tenant to pay an amount for capital costs or depreciation.

NSW

See sections 23-24B. These are not recoverable from the tenant and any provision to the contrary is void.

NT

See sections 43-45. Provisions within leases requiring the tenant to pay any capital costs of the building in which the retail shop is located or a building in a retail shopping centre, or any areas used in association with a building, or capital costs of plant in such building or area, depreciation or interest or other charges incurred by a landlord in respect of its borrowings, are void.

QLD

See section 7(3). The landlord cannot recover from tenant as outgoings:

• land tax;
• expenditure of a capital nature including the amortisation of capital costs;
• contributions to a depreciation or sinking fund;
• insurance premiums for loss of profits;
• insurance excess on a claim on the landlord's insurance policies;
• landlord's contributions to merchants associations and centre promotion funds; or
• payment of interest and charges on amounts borrowed by the landlord.

SA

See section 13. Similar to NSW sections 23-24. However, no equivalent to NSW sections 24A or 24B.

Note: Refer to section 13 regarding Outgoings.

TAS

See sections 18(2) and 18(4).

The tenant is not liable for the following outgoings:

• capital expenditure in relation to the premises;
• any contribution by the landlord to depreciation or a sinking fund;
• any contribution by a landlord to promotion and advertising;
• any interest or charge on money borrowed by the landlord;
• any insurance premium for loss of income by the landlord; and
• any outgoings not specified in the lease that were reasonably foreseeable at the time the lease was entered into.

The landlord may not recover depreciation from tenant.

VIC

See sections 41-45 and 50. The landlord cannot recover from the tenant as outgoings:

• capital costs of the building in which the premises are located or any areas used in association with the building or of plant in the building (unless there is a provision in the lease that requires the tenant to undertake capital works at the tenant's own cost, or in respect of an essential safety measure, there is a provision that requires the tenant to pay for the costs, or part thereof, of carrying out repairs or maintenance work, or an installation relating to fitout for which the tenant has agreed to pay);
• depreciation;
• contribution to a sinking fund to provide for capital works;
• interest or other charges incurred by the landlord in respect of amounts borrowed by the landlord;
• rent under a head lease or rent and any other costs associated with other land; or
• from 1 July 2003, land tax.

See section 49. From 1 July 2003, management fees are only recoverable if:

• they relate to the management of the building/centre in which the premises are located; and
• the lease or DS specifies the amount of the management fee and its rate/method of calculation.

Management fees cannot increase annually by more than the adjustment in CPI. The amount of salaries and administrative costs are not included in the indexation base.

WA

See section 12. Under section 12(2) a provision in a retail shop lease of premises in an RSC which would require the tenant to make a payment to or for the benefit of the landlord (whether by way of contribution to a sinking fund, as part of the operating expenses or however) for or in respect of the amortisation of all or part of the costs of or incidental to:

• the construction of the RSC; or
• any extension of or structural improvement to the RSC; or
• any plant or equipment that is or becomes the property of the owner of the RSC,

  is void.

In addition to the above, in respect of any retail shop lease:

• management fees (defined in section 3(1) to include costs of and incidental to the collection of rent or other moneys or the management of premises such as costs in respect of management offices, plant and equipment and staff) are not recoverable from the tenant: section 12(1f);
• land tax is limited as set out below.

See section 12(3A). A provision in a retail shop lease that obliges the tenant to contribute towards the cost of any landlord's finishes, fixtures, fittings, equipment or services is void unless the DS contains a statement notifying the tenant of the provision.

Other than the above (and the section 9 proscriptions concerning key money) there are no prohibited inclusions in the operating expenses and the general operating expenses provisions above apply, for example, the specificity required in the lease.

Definitions and currency