Beware of the great service charge swindle

More landlords are tricking commercial tenants into paying higher service charges than they should, writes Anna Main of Landwood Group.

Inflated service charges are a problem that’s on the rise and comes as the economic slowdown is starting to hit the region’s firms hard. At Landwood Group, we’re seeing a surge in businesses coming to us for advice on how to fight back against these unfair charges.

The issue comes when landlords and agents overcharge tenants for services that, in many cases, they simply do not benefit from and are not liable for.

It’s a tricky and complex area, as few tenants have the time, expertise or knowledge to challenge landlords effectively.

We have found countless examples of landlords abusing the trust of tenants by charging them for items including unnecessary insurance, utility costs, plant maintenance, and reception staff.

We’ve even seen landlords charging tenants for teas and coffees.

The bottom line is you should only ever be billed for services that you as a business directly benefit from – if that’s not the case, then you are due redress.

So how do you know if you’re paying too much? We recommend undertaking a comprehensive audit of service charges in order to determine whether the monetary demands of landlords fall within the contractual obligations of the tenant’s lease.

If errors are detected, you can negotiate reductions, refunds or credits of any inappropriate or unreasonable costs.

Due to these inflated service charges becoming more common, we launched a service charge consultancy department to do just that. Our dedicated team undertakes forensic investigations to maximise savings and mitigate outgoings for occupiers on either a single property or an entire portfolio.

Challenging unfair service charges can lead to companies saving thousands of pounds. For example, one of our clients saved £40,000 by cutting one service charge bill in half after we found they were being charged for electricity and air conditioning they did not have in their suite and which should have been landlord costs.

In the current economic climate, it is vital for businesses to maximise value on every single outgoing.

So, whether you operate from a glittering city centre tower, a sprawling warehouse or somewhere in between, scrutinise your service charge.

  • Anna Main is the director of commercial asset management at Landwood Group

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