If you’re new to commercial property ownership and investment, there is a lot to learn in a short amount of time (before your first financial year ends). One especially important thing you need to learn a little about is an Outgoings Audit.
So, What Is An Outgoings Audit?
At the end of each financial year, your commercial Property Manager is required to supply an audited annual statement for the property, based on their apportion-able outgoings. This audited annual statement needs to be supplied within three months of EOFY. These statements include a range of expenses including administrative costs, advertising and promotion, air conditioning – maintenance and operating costs, caretaking, cleaning, electricity, fire levies and fire protection, insurance and costs associated with lifts and escalators, management, repairs and maintenance, security, telephone and wages.
Why Is An Outgoings Audit Important?
Most net-type leases deal with the tenants’ payment of outgoings in the lead up to the annual budget, which determines the amount of the monthly contribution. At the EOFY, an audit has to be prepared, comparing actual spending with the budgeted figures for the year. From here, your tenants’ payments are adjusted accordingly. This system is the most practical way to measure and control fees, charges and obligations for a specific property. It allows more control in the recovery of outgoings from tenants and sets out how and when these procedures must occur.
The Benefits For Both Parties Are Clear.
The use of an accurate budget to control and measure the outgoing costs is not only beneficial for your tenants but also you. It helps to provide reasonable estimates for the costs associated with renting the property, and it minimises large expenses from major outgoings. It works far better for both tenants and landlords when the payments for maintenance are averaged out across the year, instead of lump sums that can cause strain on a business. This makes for a longer-lasting tenancy and a better relationship between landlords and tenants.
If you want to know more, get in touch with the McGees Property Management team.