Service charges are a mechanism by which property owners can seek to recover from their tenants the costs incurred in maintaining a building’s fabric and shared services. Utilised fairly and transparently it should be relatively uncontentious, but unfortunately this is not always the case and disputes do arise. Service charge work is closely related to dilapidations, an area in which we are unsurpassed by any other surveying firm and for many years we have been at the forefront of landlord and tenant dispute resolution.
Experience
Our position as leaders in the field of landlord and tenant disputes means that not only are we fully up-to-speed with the latest case law, procedures and guidelines but we are also innovative in applying modern thinking to traditional service charge applications. In addition, by working for both landlords and tenants we apply fully reasoned and well balanced logic, ensuring commercial and pragmatic advice to all our clients.
Knowledge
Appropriate service charge advice requires knowledge in a number of fundamental areas. These include building construction, technology and pathology, life cycle costing and planned maintenance programming. These building issues must then be considered in the context of breaches of lease covenants, appropriate standards of repair, case law, market awareness/requirements and so on. At Malcolm Hollis we are particularly well placed for delivering this complicated service with a dedicated team specialising in landlord and tenant dispute resolution.
Reconciliation
Service charges are by their very nature sometimes controversial. Differences of opinion can understandably arise when the party paying for the work is not actually involved in organising it. A landlord’s overriding objective is to maintain the investment value of the property; a tenant wants to enjoy the use of the premises, generally at the lowest appropriate cost. Unfortunately these two differing requirements do have the potential to be stretched and indeed sometimes snap, with often fairly large sums of money at the centre of the conflict.
Approach
Service charge disputes can become fairly heated, often towards the end of leases when tenants’ interests become more short-term and occupiers are clearly less interested in expenditure for the benefit of others. Owners however generally have a longer-term interest in maintaining investment value, sometimes seeking enhancements to assist in re-letting the premises.
The scene can then be set for a potential dispute, and the adviser’s skill is put to the test through analysing the requirements of the lease, understanding market requirements, assessing the appropriate standard of repair and applying this to the condition of those building elements within the service charge framework. These considerations are all fundamental to the provision of appropriate advice, whether acting for landlord or tenant.
Guidance is provided in the RICS Code of Practice for Service Charges in Commercial Property, which fundamentally aims to minimise disputes, resulting in less confrontational relationships between owners and occupiers, through encouraging greater transparency, better communication and the provision of prompt and clear information relating to proposed expenditure.
Certainly our experience at Malcolm Hollis centres on being fair and reasonable and delivering commercial solutions in this complex area of surveying.
Service charge products
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