Landlords of commercial property will not be able to exploit businesses through unfair and unclear service charges, thanks to a new professional statement that comes into effect from 1stApril.
The Royal Institution of Chartered Surveyors has launched the statement – ‘Service charges in commercial property’to ensure business tenants in the region gain access to transparent, upfront and fair costs for the maintenance and upkeep of their property, and that any charges incurred are in accordance with the terms of the occupational lease.
The requirements in the statement alsocall 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 tenant. The professional statement providesguidance on more technical matters too, including the way in which service charge monies should be held within bank accounts.
All regulated firms must comply with the new requirements in the professional statement as of 1stApril 2019.
RICS has worked with major property bodies representing owners, occupiers and managing agents – including BPF, BRC, BCO, PMA, Corenet, REVO, PMA alongside ICAEW and the Law Society, the professional bodies for accountants and lawyers – to produce the recommendations in the professional statement. Its balanced requirements reflect the needs and opinions of both landlords and tenants, and the specific considerations of different sectors.
Paul Bagust, RICS Global Property Standards Director said: “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. Therefore, 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.”
David Tudor-Morgan, Head of Retail Operations at British Land added: “These new requirements provide the industry with a clear and robust set of guidelines that equally benefit occupiers, landlords and agents.”