Under a gross lease, the tenant pays a single, fixed rental amount. The landlord is responsible for all (or most) property-related operating expenses, which are included in the rent. These typically cover things like council rates, land tax, insurance, maintenance, and sometimes utilities.
In a net lease, the tenant pays a base rent plus some or all of the property’s operating expenses. Tenants may be responsible for expenses such as council rates, insurance, land tax, maintenance, and other outgoings, in addition to the base rent.
There are pro’s and con’s of both types of Leases depending on whether or not you are a tenant or landlord.
A gross lease provides a tenant with predictable fixed rental payments which assists them with their budgeting. Whilst the rent will be slightly more, the tenant is aware of their financial obligations and are not exposing themselves to the rising costs of outgoings.
A net lease on the other hand means a lower base rent for a tenant, but they may assume some of the administrative responsibilities of managing outgoings etc which the landlord would otherwise do under a gross lease. They are also exposed to the unpredictable cost of the outgoings.
With a net lease the landlord can pass all their outgoings on to the tenant so they are some what protected from the rising cost of any of their outgoings.
It is critical that the terms of your lease are drafted in a manner that suit you and the needs of yourself and your business. Whether you are a tenant or a landlord don’t take any chances in using a pro forma lease you have found online, contact us today on 02 4627 3333 and have one our experienced solicitor tailor your lease to your needs.
This article was published on 10/06/26 and the information is valid as at the date of publishing. This article is general in nature and is not and should not be considered or relied on as legal advice. Meehans Solicitors is not responsible in the event this information is relied upon by the reader in the absence of specific legal advice.
