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What is Gross versus Net Rental?

In many cases, the net rental figures quoted to you by your landlord won’t include operating expenses related to running the premises. Instead, as a tenant, you could be charged extra for utilities such as:

  • common area charges
  • parking
  • generator contributions
  • cleaning
  • security
  • park levies

In most cases gross rentals should include these items. The two exceptions to this are water and electricity – these will either be metered or pro-rated on a consumption basis according to the floor area occupied within a shared facility.

These additional expenses that are sometimes left out of a quoted rental figure can add up to a significant extra cost, which can mean that the total cost of renting premises becomes unaffordable. Sometimes, though not always, landlords quote ‘net rental’ numbers so that the premises look less expensive than their competitors’. They’re then able to secure a deal while at the same time having you, their tenant, carry the risk of increases in operating expenses.

In general, this won’t happen if you deal with listed funds or larger, private landlords. In these cases, lease terms are more transparent and the saleable details are usually clearly itemised on all marketing information.
In summary then, always request a ‘gross rental’ figure from your prospective landlord, as this will give you a more complete and useful measurement of the total cost for the space you are looking to occupy. Also, always pay attention to the fine print in your lease agreement, in order to prevent “unquoted” operating expenses becoming your direct responsibility without you realising it.

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