Service charges – common issues and the RICS professional statement

The lack of statutory control over commercial service charges, compared with the residential sphere, does not mean that it is a wild west world, in which anything goes.  It is true that everything depends on the terms of the individual lease, but the RICS professional statement on service charges in commercial property plays an important part in promoting best practice and reducing the incidence of disputes.  Failure to comply may amount to professional misconduct, and moreover could support a negligence claim.

A changing world means that the topic of service charges never stands still, and there are always new challenges to the professional statement, and to the landlord’s aim of recovering service expenditure.  Case law continues to expose new pitfalls for both the manager and the occupier.

• ‘Final, conclusive and binding’ – is the Sara and Hossein case the last word?
• Charging for improvements
• Methods of apportioning of service charge contributions between tenants
• The role and limitations of ‘sweeper’ clauses
• End-of-lease major expenditure
• Reserve and sinking funds, and the appropriate role of depreciation charges