‘My Service Charge is too High’ - Commercial Properties - Summary
Summary
In my previous posts regarding having a discussion with your landlord or their agents, I have tried to suggest a few ways that may make those discussions a little easier when you have an issue with your service charge contributions. Principally I have suggested four main areas to improve your position:
Check your lease
Discuss the budget
Consider what is a ‘high’ service charge
Be polite
As I have previously mentioned I think the main area of conflict occurs where there is mistrust and a perception that poor service is being provided at an unreasonable cost. This mistrust may be further manifested when a tenant may believe there is an unhealthy relationship between a landlord and a contractor or supplier and that is the reason for the costs.
One way for both parties to avoid conflict may be to look at the Core Principles in the Service Charges in Commercial Property 1st Edition 2018. I would refer to 4 main areas which are defined in the document:
Service Costs - All costs should be transparent so that all parties, owners, occupiers and managers, are aware of how the costs are made up.
Communication and Consultation - While the owner has the right to set the standards by which their investment will be managed and has a duty to manage, managers should consult with occupiers regarding the standard and quality of service charge provision required.
Transparency - Transparency is essential to achieving good communication. By being transparent in the accounts, explanatory notes, policies and day-to-day management, the manager will help prevent disputes. Prompt notification of material variances to plans or forecasts ensures better working relationships between owner, manager and occupier.
Value for Money - Service quality should be appropriate to the location, use and character of the property. The manager should procure quality service standards to ensure that value for money is achieved at all times. The aim is to achieve effective, value-for-money service rather than merely the lowest price.
By considering these and other areas I have mentioned in these articles it may be possible to achieve a harmonious position for all. As always, I'd love to hear your opinions on my thoughts if you have any.
