How High is Too High?

Following on from my previous article, assuming you have checked your lease and discussed the budget, here are a couple more suggestions to consider when discussing your concerns over service charges.

3. What does too high actually mean?

Every now and again I get a call or email that goes along the lines of ‘Can you have a look at my service charge as I think it is too high.’ My response is always the same ‘Why do you think it is high?’ Invariably I hear that the amounts being charged seem ‘high’ and, in virtually every case, that a service is being performed badly and doesn’t justify the charge. It is this latter point on which I think the caller has based their opinion, rather than the cost.

So, what is too high? It's important when judging this to consider the nature of the property you are occupying. If it is 100 years old the costs may vary dramatically compared to a modern building built in the last 10 years or even one that has undergone a recent major refurbishment. Rather than thinking about ‘high’ maybe it would be better to consider whether you are getting value for money for the service that has been provided.

There are a few firms in the market that produce data showing the average cost per square metre of a variety of services. These can be quite helpful in getting an idea of the level of cost that may be appropriate, but they are more of a guide than set in stone. As I’ve mentioned all buildings are different so base your concerns on the quality of service compared to cost.

4. Be Polite

Manners cost nothing and if you want a resolution to a query don’t go in all guns blazing threatening to withhold rent (you should never do this in a service charge dispute), saying you going to speak directly to the landlord and complain to the RICS. This achieves only animosity and makes negotiation difficult from the start. Be honest you want to resolve the issue rather than have a fight. I have been involved in meetings with tenants where it has been clear from the onset that they want a pound of flesh first before discussions even start.

Be cautious going into a meeting armed with alternative quotes to justify your case. There are no rules stating a landlord must use the cheapest quote and indeed many will choose a contractor who is not the cheapest, but they have an established relationship. This relationship may indeed save money in the long run as alternative quotes may be deliberately kept low to get access to the contract and as a result, the service may be reflected in this initial low quote.