Section 39 of the Retail Leases Act 2003 provides that in order for the landlord to be able to recover the cost of outgoings (which may include the costs of maintenance) from the tenant, the outgoings must be specified in the lease.  This is usually found in the “outgoings” section or “definition” section of the lease.  If maintenance costs are not itemised, these costs cannot be recovered from the tenant, and the liability to pay for such costs lies with the landlord.

For example, such costs that may be itemised in the lease that are directly recoverable from the tenant, because they relate to the premises, are the costs of:
• drycleaning of carpet;
• cleaning of shopfront windows; and
• regular maintenance of the air conditioning system.

On the other hand, costs that may be itemised in the lease that are recoverable from the tenant on a proportionate basis, because they relate to the common areas of the building in which the premises are located or the building itself, are the costs of:
• cleaning of the toilet facilities;
• garbage collection fees;
• garden maintenance;
• external window cleaning; and
• section 52-type repair items, providing they are not “capital costs” as defined by section 41 of the Retail Leases Act 2003.

Note, when a repair is urgent, and the tenant has taken reasonable steps to arrange for the landlord to undertake the repair but the landlord fails to do so, the tenant can undertake and pay for the repair and recover the reasonable cost of the repair from the landlord (see sections 52(4) and (5) of the Retail Leases Act 2003).

A tenant is not required to pay outgoings (including the cost of repairs and maintenance) unless they have been given an estimate of the outgoings at the start of the lease, and at least one month before the start of each of the landlord's accounting periods (usually the start of each financial year).  This requirement is contained in section 46 of the Act.  Upon entry into the lease, it is usual for a landlord to give the tenant the estimate of outgoings as part of the disclosure statement that the landlord is obliged to provide to the tenant.

Failure to provide the estimate of outgoings means that the tenant is not liable to contribute to any outgoings (of which an estimate is required to be given pursuant to section 46 of the Act) until the tenant is given that estimate.

If you have further queries about repairs and maintenance under the Retail Leases Act 2003 contact the VSBC on (03) 9651 9316.