Gross rent vs net rent: what is the difference?
Gross rent includes the building's outgoings in one figure; net rent is the base rent alone, with your share of the outgoings paid on top.
Gross rent is a single figure that includes the building outgoings, which the landlord pays out of the rent. Net rent is the base rent only: you pay your proportional share of the outgoings on top, so the quoted rent is not what you actually pay. The same office can be quoted either way. What changes is who carries the risk of outgoings rising during the term, and how you have to adjust one quote before comparing it with another.
- Gross rent
- One figure. The landlord pays the outgoings.
- Net rent
- Base rent plus your share of outgoings.
- Semi-gross rent
- Outgoings included at a base year; you pay increases after that.
- Serviced and flex offices
- Effectively fully gross: one monthly fee.
- Compare quotes on
- Gross-equivalent rent per m² per year.
- GST
- A separate question: both are usually quoted plus GST.
What is gross rent?
Gross rent is rent that includes the building's running costs. Council and water rates, building insurance, cleaning of common areas, security, lift and air-conditioning maintenance and management fees are all met by the landlord out of the rent you pay. Your budget is a single line, fixed except for the rent reviews written into the lease.
The trade-off is that the landlord is pricing in the risk of those costs rising, so a gross rent normally sits above the base rent of an equivalent net deal.
What is net rent?
Net rent is the landlord's return on the building and nothing else. Outgoings are billed to you separately, usually as a monthly estimate that is reconciled against actual spending after the end of the landlord's accounting year. Your share is your lettable area divided by the total lettable area of the building. See our guide to outgoings for what can be recovered.
Net leases dominate A-grade and premium CBD buildings. They are transparent, because you can see what the building costs to run, but the number you sign up to is not the number you pay.
| Cost | Gross rent | Semi-gross rent | Net rent | Serviced office |
|---|---|---|---|---|
| Base rent | Tenant, in the one figure | Tenant | Tenant | Tenant, in the monthly fee |
| Building outgoings | Landlord, out of the rent | Landlord up to the base year | Tenant, by share of lettable area | Operator, in the monthly fee |
| Rises in outgoings during the term | Landlord | Tenant, above the base year | Tenant | Operator, until the fee is reviewed |
| GST | Tenant, usually on top | Tenant, usually on top | Tenant, on rent and outgoings | Tenant, usually on top |
| Typically seen in | Smaller and suburban buildings | B and C grade offices | A-grade and premium CBD | Flexible workspace |
Semi-gross, and why it exists
A semi-gross lease is the common Australian middle ground. Outgoings are included in the rent, but only at the level they sat at in a nominated "base year". Once actual outgoings exceed that base, the increase is passed through to you.
The detail that matters is which year is the base year. A base year set at the start of the lease means you absorb every increase from day one; a base year set later, or reset at each review, meaningfully reduces what you pay.
How to compare a net quote with a gross quote
Two proposals are only comparable once both are expressed the same way. Convert the net quote to a gross-equivalent figure, then compare like with like:
- Gross-equivalent rent per m² a year = net rent per m² a year + outgoings per m² a year
- Annual cost = gross-equivalent rent per m² a year × your lettable area in m²
- Monthly cost = annual cost ÷ 12, plus GST
Use the landlord's current outgoings estimate, and ask for the last reconciliation statement so you can see how accurate previous estimates were. Make sure both quotes are on the same GST basis too; our guide to GST on commercial rent explains why most are quoted plus GST.
Then check the review mechanism on both. A lower gross rent with fixed annual increases can overtake a higher net rent reviewed to CPI within a few years, so compare the total over the term, not only year one.
Which suits your business
A gross or semi-gross lease suits teams that value budget certainty and do not want to audit a landlord's spending. A net lease suits tenants large enough for outgoings to be worth scrutinising, and those willing to trade certainty for a lower headline rent.
If you want neither conversation, a serviced or flexible office is the fully gross end of the market: one monthly fee covering rent, outgoings, fitout, furniture, internet and reception.
Last reviewed 23 October 2026.
Common questions
What is gross rent?
What is net rent?
Is gross rent more expensive than net rent?
What does semi-gross mean in a commercial lease?
Is serviced office pricing gross or net?
Does a gross lease mean my rent never increases?
How do I compare a net quote with a gross quote?
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General information only. This guide explains how office leasing usually works in Australia. It is not legal, financial or tax advice, it does not take account of your circumstances, and lease terms and legislation change. Get advice on your own lease before you sign it.
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