Service charges in commercial property
A service charge may not mean that all the costs incurred by the landlord in providing a service are recoverable. Seek specialist advice to identify costs that might fall outside the service charge provisions when valuing the property.
Professional advisers need to be informed of current practice and legislation relating to the management and administration of service charges in commercial property to ensure they are acting in their clients' best interests and providing adequate advice.
Rent review specialists should also seek advice as an onerous service charge liability and any ongoing disputes may have a negative impact on rental value.
This section is maintained by Peter Forrester of Peter Forrester SCCS Ltd.
RICS has produced guidance to mitigate issues faced during the COVID-19 pandemic: RICS advice on service charges during the COVID-19 pandemic.
In addition, the Ministry of Housing, Communities and Local Government (MHCLG), in consultation with various industry bodies, has produced a Code of Practice for commercial property relationships during the COVI-19 pandemic which contains the following further advice in respect of service charges:
'Service and Insurance Charges
It is important that buildings continue to be ensured and safely-maintained so that they are ready to support the economy’s recovery after the COVID-19 crisis, so any service charge and insurance charge payable under the lease is not profit-making, and needs to be paid in full. Recognising the impact this may have on tenants’ finances, in relation to service charges: