Public warned against turning to ‘law on the cheap’

Commercial landlords are being reminded that new rules relating to commercial property service charges will come into effect from April 1, 2019.

Lisa Evans, Head of Property at Kirwans law firm, is urging landlords and agents to ensure they are prepared to meet the requirements, introduced by the RICS, that apply to its members and relevant RICS-regulated firms.

The mandatory obligations, found here, are aimed at protecting commercial tenants from unscrupulous landlords and tenants and ensuring greater transparency around service charges. It is also expected that they will reduce the causes of disputes and provide guidance on resolution.

Lisa said:

“The new RICS guidelines offer clear and concise requirements that members of and businesses accredited by RICS must adhere to and replace the three previous editions.

“The guidelines act as a best practice document that provides a benchmark by which all those involved with the commercial property sector should set their own code of conduct.

“The requirement for greater explanation from landlords and agents about service charge costs and what exclusions should be made promotes a greater level of transparency and understanding around what are often seen by occupiers as hidden and unfair costs.

“Landlords should benefit too, with the statement including an acknowledgement that, when it comes to the Minimum Energy Efficiency Standards, there may be cases whereby energy efficiency improvements could comprise a legitimate service charge.”

The statement will be applicable to all service charge periods starting from April 1 2019, with the nine mandatory requirements published by the RICS covering points such as ensuring budgets are accompanied by explanatory notes and show actual expenditure, with interest earned detailed and credited to the service charge accounts.

“The full document is extensive and explains each of the requirements in greater detail, so I would urge anyone involved in the commercial lettings industry to download the information and read it alongside their current lease to see how it compares.

“Although it may appear daunting, we should welcome the statement as its implementation ought to reduce the possibility of dispute occurring, resulting in reduced costs, improved levels of trust, and more time to spend on the business.”

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