RICS tackles ‘unfair’ commercial property service charges

RICS has launched new mandatory requirements to ensure service charges to commercial tenants are transparent, upfront and fair, and that any costs incurred are in accordance with the terms of the occupational leases.

The launch of the RICS professional Statement ‘Service charges in commercial property’ is a momentous step in helping to better regulate the activities of landlords and their agents, whilst protecting tenants from having to pay for unscrupulous repair or maintenance costs.

RICS has worked with major property bodies representing owners, occupiers and managing agents – including BPF, BRC, BCO, PMA, Corenet, REVO, PMA alongside ICAEW and Law Society, the professional bodies for accountants and lawyers – to produce the recommendations, with balanced requirements that reflect the needs and opinions of landlords and tenants and the specific considerations of different sectors.

Paul Bagust, RICS Global Property Standards Director, commented: “It is hugely encouraging to see all sides of the property industry collaborating and supporting this new document and committing to working to the highest professional standards. This professional statement offers best practice on ensuring occupiers are given clear and concise information on all of the service charges they can expect to pay up front. So, it will help to better protect both landlords and tenants by avoiding costly – and often devastating – disputes over what can be a substantial business overhead.”

The statement also calls for any potential or future changes to service costs to be made clear and obvious to tenants at the outset, and that any costs not specifically mentioned in a lease will not be recoverable from the tenants. The professional statement also provides guidance on more technical matters too, including the way in which service charge monies should be held within bank accounts.

The wider use of mandatory requirements in the new Guidance Note will be of great benefit to responsible Landlords and Tenants alike and will help to remove non-compliant parties and managing agents from the market.

Grint, Carl 03 cropCarl Grint, Director and Head of Property Management at Aitchison Raffety, commented “We are delighted with the publication of Service Charges in Commercial Property (1st edition September 2018).  At last, we see the Royal Institution of Chartered Surveyors imposing mandatory requirements for service charge managers to ensure service charges are run with transparency, upfront and fair.  The regulations will come into effect in April 2019 to give managers time to update their accounting procedures.  This is a big and welcome step towards improving professionalism in property management and help to outlaw ‘rogue’ landlords and managing agents.”


Contact Carl Grint on 01494 480 800 or via email to carl.grint@argroup.co.uk.

Shutterstock purchase 1 web