A new professional statement comes into effect on 1 April that will prevent commercial property landlords from issuing unfair or unclear service charges to businesses.
Superseding the three most recent Service Charge Codes, the ‘Service charges in commercial property’ statement has been released by The Royal Institution of Chartered Surveyors (RICS).
The main objective of the new statement is to ensure landlords are making businesses aware of the costs included in their leases, including any upfront costs and costs required for upkeep. It hopes to makes costs transparent and fair for landlord and tenant.
The statement also dictates that tenants must be made aware of potential future changes to costs, and that tenant cannot be charged for costs that are not mentioned on the lease.
It is also important to note that money recovered for service charges must be held in a bank account.
In order to produce the statement, RICS worked with a number of major property bodies and has made efforts to consider what both landlords and tenants from different sectors require.
Global Property Standards Director at RICS, Paul Bagust, has 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.”
“These new requirements provide the industry with a clear and robust set of guidelines that equally benefit occupiers, landlords and agents,” added David Tudor-Morgan, Head of Retail Operations at British Land.