A question we often get asked is whether a Landlord can pass the cost of Land Tax on to a Tenant as an outgoing in a Lease?
Our answer –
Generally not.
The Retail and Commercial Leases Act contains in Section 30 a specific prohibition on Landlords passing on the cost of Land Tax to a Tenant.
However, there are some situations where the Act and therefore Section 30 does not apply.
Briefly, they are:
-if the Rent exceeds $400,000.00 per annum (exclusive of GST)
-if the Tenant is a public company
-if the Tenant is an insurance company
-if the Tenant is a District council
-if the Lease was prepared prior to 1990
-if the premises are used for a purpose that means the Act does not apply.
So, if your situation happens to be one of the very few where the Act doesn’t apply then you can include Land Tax as an outgoing, provided of course that the Tenant is willing to accept it.
As always if you have any questions, please let me know.
Regards
Steve Evans