Commercial property rates, taxes and operating costs
Municipal rates, utilities, operating-cost recovery, VAT and the fit-out allowance — the costs beyond base rental, and who carries each one.
Reviewed by Joe Sokolic · Updated
Base rental is usually 60–80% of what occupying commercial space actually costs. Here's the rest.
Municipal rates
Levied by the municipality on the property's value at a commercial tariff (higher than residential). On gross/semi-gross leases the landlord carries rates in the rental; on net leases they're billed to the tenant. Rates rise with the municipal valuation roll, updated every few years — the jump can be large. See objecting to a rates increase.
Utilities
Electricity and water are almost always the tenant's cost, metered or apportioned by area. Ask what backup power costs to run and how it's passed through.
Operating-cost recovery
Running the building: cleaning, lifts, security, landscaping, insurance, management. Expressed in rand per m² per month, billed monthly on semi-gross and net leases. On a multi-tenant office building expect roughly R15–R40/m² by grade; it escalates annually.
Parking and VAT
Parking bays are charged separately from floor area — open, then covered, then basement. Commercial rental is a taxable supply, so VAT is added to rental and recoveries; a VAT-registered tenant claims it back.
Fit-out and reinstatement
Fitting out raw space is a capital cost, part-funded by a landlord tenant-installation allowance. Most leases also require you to strip the fit-out out at the end of the term — price that reinstatement in at the start.