As a business tenant, understanding service charges in your commercial lease helps you avoid unexpected costs and budget accurately. Here’s what you need to know about managing these often-complex charges.
In This Article
What Are Service Charges?
Service charges cover the landlord’s costs of maintaining and running the building. These fees typically include building repairs, cleaning common areas, security, and building insurance. Unlike rent, service charges can vary year to year based on actual costs incurred by the landlord. The charges should be transparent and reasonable.
Common Service Charge Items
Your lease should clearly list all included services. Most commercial leases include building maintenance and repairs alongside cleaning of common areas. Security services are often part of the package, as are lift and air conditioning maintenance. Building insurance costs are generally passed to tenants through service charges. You might also pay management fees and utilities for common areas through your service charge.
Your Rights as a Tenant
The law provides you with specific rights regarding service charges. You can request and receive a detailed breakdown of all charges applied to your tenancy. When charges seem unreasonable, you have the right to challenge them through proper channels. Your landlord must provide access to supporting documents and receipts when requested. For major works exceeding £250 per tenant, you must be consulted before work begins.
Reading Your Service Charge Statement
A well-prepared service charge statement contains several key elements. It should detail costs for each service provided and specify your percentage share of the total costs. Good statements include comparisons with previous years to track changes. Information about planned major works should be clearly communicated. The method for calculating management fees should be transparent and fair.
Managing Your Service Charges Effectively
Smart tenants actively manage their service charges from the start. Review your service charge budget when you receive it and maintain open communication with your landlord or managing agent. If costs increase unusually, ask for explanations. Cross-reference charges against your lease terms to ensure compliance. Document all communications about charges for future reference. When issues arise, consider joining forces with other tenants to address common concerns.
Warning Signs to Watch For
Experienced tenants know to watch for certain red flags in service charges. Unexpected significant increases without clear explanation need investigation. Be wary of charges appearing for services not mentioned in your lease agreement. Poor transparency in calculations often signals problems. If your landlord or managing agent responds slowly or inadequately to questions, this could indicate issues. Watch out for improvement costs being passed off as maintenance charges.
Your Next Step
Contact us today at 0121 268 3208 or via email at info@onyxsolicitors.com for a FREE consultation. Let us help you achieve the peace of mind that comes with having expert legal support on your side.
