Net lease and gross lease

In a net lease, the tenant pays the property outgoings — rates, insurance, maintenance — in addition to rent. In a gross lease, the landlord pays them out of the rent received.

Why it matters

It fundamentally changes what a headline rent means. A $100,000 net rent and a $100,000 gross rent produce very different returns to the landlord, because in the second case outgoings come out of that figure.

Most New Zealand commercial leases are net or close to it. Residential tenancies are effectively gross — the landlord bears the outgoings.

What is usually included in outgoings

Rates, building insurance, body corporate levies, common area maintenance, building management, and sometimes structural maintenance depending on the lease.

Common misunderstanding

Always establish net or gross before comparing yields. A commercial yield quoted on gross rent is not comparable to one quoted on net.

"Net" is not standardised. Which specific outgoings the tenant bears varies between leases. Read the schedule.

Structural and capital items usually remain the landlord's, even under a net lease. Roof replacement is generally not an outgoing.

Related terms

Last reviewed: 1 August 2026 · General information only, not legal or financial advice.

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