Understanding Service Charges for Commercial Property
Service charges are a crucial aspect of leasehold commercial properties. They represent the costs that tenants pay for the shared services and maintenance of the property, which the landlord is obligated to provide according to the lease agreement. These services are typically managed in line with good estate management principles.
The lease outlines how service charges are managed, what expenses can be charged, and how costs are allocated among tenants. However, the arrangements and calculations can be complex, requiring careful attention to ensure accurate tenant apportionment.
What do service charges cover in commercial property?
Commonly covered costs include building insurance, security, landscaping, cleaning of communal areas, and repairs to shared facilities. Due to fluctuating costs, which have generally seen an increase in recent years, service charges are managed on an annual basis. If you own a commercial property where you have service charges, it is important to get professional advice.
Benefits of Professional Service Charge Advice:
• Provides a sense check and peace of mind that all is in order with your service charges, particularly in the context of rising costs and demands
• Ensures the service charges are correctly managed and calculated, with any errors identified potentially going back years or continuing for years to come if left unaddressed and without challenge
• Holds the landlord to account to properly justify and evidence important decisions that impact the level of service charges, particularly those issues and events that have high cost implications
• Improves the quality and value of the services provided
• Mitigates risk, costs and outgoings, with reduced service charges payments and refunds due where savings are achieved.
Our Commercial Property Service Charge Services
At Bradley-Mason LLP, our experienced chartered building surveyors provide comprehensive Service Charges advice tailored to your property’s specific needs. Here’s how we can help:
1. Initial Pre-lease Check
Prior to acquiring your premises and signing your lease, be that by way of renewal, re-gear, assignment or new terms, we will review the service charges lease provisions and advise on any potentially onerous risks, so that you are fully aware and pre-warned, and so that the terms can be varied or restructured accordingly.
2. Initial Assessment
We will provide a desktop review and assessment on your existing service charges obligations to provide a quick and cost-effective appraisal of the quality, accuracy and value of the service charges being provided. We will identify any miscalculations and errors that may apply in the service charges caps, apportionment matrix and schedules, and advise if this impacts your service charges positively or negatively. A detailed challenge will be recommended as appropriate.
3. Detailed Challenge
This involves a further forensic review of the lease and service charges documents, along with a detailed technical building surveying site inspection, to further identify, establish and succinctly articulate all opportunities for potential savings. As chartered building surveyors, our advantage is that we deal with all technical, legal and cost implications, to ensure the lease provisions are being applied and adhered to correctly. All negotiations will then be progressed proactively to a conclusion, often resulting in significant savings achieved.
4. Landlord’s Sense Check
Our offering for landlords entails a peer review and sense check of your current arrangements, to ensure accuracy, value and best practice across the management of your estate(s). We can also advise prior to acquisition or deal completion, to ensure the service charges are set up and documented as desired and expected, to minimise future risks, disputes and shortfalls.
Why Choose Bradley-Mason for Your Commercial Property Service Charge Needs?
• Expert knowledge: Our chartered building surveyors and director-led approach brings years of experience and an in-depth understanding of all the legal, technical and cost components involved with service charges disputes across all sectors of commercial property.
• Tailored approach: We develop and provide customised and commercial service charges advice that addresses the unique requirements of your business and property interests, to reduce expenditure and mitigate risks.
• Cost-effective: Our proactive, robust and forensic approach gives you peace of mind and ensures your service charges are fair, properly managed and correct, to provide value for money and often with significant savings achieved.
