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Our lawyers are experts in their fields. Through commentary and analysis, we give you insight into the pressures impacting business today.

| 1 minute read

Sunlight is the best detergent

The legislation governing residential service charges means that residential and commercial service charges are often dealt with by completely different people and even different firms.  Many of my commercial clients complain about service charge costs and lack of accountability - the RICS code of practice on commercial service charges has helped, but isn't the whole solution.  However, an article in the Financial Times recently brought home to me how the issues for tenants are the same, whether the charges relate to their home or their workplace.

It's true that residential leaseholders have a right to manage, which commercial tenants lack.  The legislation around that calls for certain majorities and votes, rightly so, to protect both landlord and tenants.  That majority is impossible to obtain in the "buy to leave" developments of central London. In any event, management of large blocks of flats is time consuming.  In the days when I did residential work, I used to tell my clients that they needed a retired member of the Armed Forces in the block if they were going to self-manage.  The point being that you need an organised and efficient resident with time to devote to making sure everything ran smoothly.

In the world of commercial leases, management consultants McKinsey have been to court recently.  One of the points in dispute there was whether the "fair proportion" of costs charged to them really was fair; another discussed when it was reasonable for works to be carried out to the goods lift.  We often see examples of expensive works to a building carried out at a tenant's expense in the final year or two of a lease.

Residential or commercial, the best way to avoid resentment and suspicion is clarity and timely accounts. The nub of most complaints is that the people spending service charges don't spend the money as if it's their own: I'm not sure any law can deliver that. The challenge for managing agents is to try.

always delivers its service charge bills punctually, the underlying accounts setting out the reasoning for any increases are routinely three years late.


service charges