New rules on service charges coming into effect in April 2019 will remove a major bone of contention between commercial property landlords and tenants, according to a leading Worcestershire property manager.
Michelle Whitehead, Commercial Property Manager at commercial property consultancy and Chartered Surveyors GJS Dillon, says that new rules from the RICS set out mandatory requirements for landlords and property managers in levying and collecting service charges.
She says: “They are designed to improve standards, fairness and transparency in the management of services charges and reduce the causes of disputes. Landlords and property managers who do not comply with the new rules may face legal and disciplinary action.”
Ms Whitehead says that the new rules clear up some areas of confusion over what service charges can be used for and what share tenants should pay.
She continues: “For example, it is now clear that where a landlord has agreed a capped or fixed service charge as an incentive to secure a new tenant, the landlord must pay for any shortfall, and not simply try to hide this and recover the shortfall from the other occupiers. The service charge matrix showing the basis for recovery of costs must be completely transparent and disclosed. There will also be much tighter timescales for budgeting and settling service charge accounts which will have to be reconciled annually.
“There will also be a benefit for tenants looking for new premises, as they can more easily compare service charges on properties they are considering.”
Further information on the changes and the nine principles by which RICS regulated property managers must abide on service charges is available from the RICS website under “Service Charges In Commercial Property, 1st Edition”.
GJS Dillon’s Property Management Department manages more than 80 office, retail and industrial properties and developments with a combined area in excess of 250,000 sq ft across Worcestershire and the wider West Midlands. Further information is available from Michelle Whitehead on tel. 01905 676169 or via www.gjsdillon.co.uk/services/management/
With offices in Worcester, Droitwich and Bromsgrove, GJS Dillon is the largest firm of Chartered Surveyors headquartered in Worcestershire. It offers a comprehensive commercial property service, including commercial agency, acquisition and business relocation, commercial property management, valuations, building consultancy and landlord and tenant rent reviews, and unrivalled geographical coverage, throughout Worcestershire and along the M5 and A38 corridors.
Picture caption: Michelle Whitehead.