Countdown to new guidelines on service charges
There are just two months before a new Professional Statement will be issued by RICS to set a marker for the standards of management required in commercial property.
The Statement will provide mandatory obligations that RICS members and regulated firms engaged in this area must comply with.
The aims and objectives of the Professional Statement are to:
- improve general standards and promote best practice, uniformity, fairness and transparency in the management and administration of services charges in commercial property
- ensure timely issue of budgets and year-end certificates
- reduce the causes of disputes and to provide guidance on resolution, and
- provide guidance to solicitors, their clients (whether owners or occupiers) and managers of service charges in the negotiation, drafting, interpretation and operation of leases, in accordance with best practice
RICS has worked with major property bodies, owners, occupiers, managing agents and the Law Society to finalise the Statement which calls for any potential or future changes to service costs to be made clear and obvious to tenants at the outset. Furthermore, costs not specifically mentioned in a lease will not be recoverable from the tenant.
RICS believe this new Professional Statement will protect both landlords and tenants by avoiding costly – and sometimes devastating – disputes over substantial business overheads.
The Professional Statement was previously issued as two codes of conduct before feedback at an industry summit deemed further clarifications surrounding service charge accounting, sinking funds and fees was required.
The full Professional Statement that will be effective from 1 April 2019 can be downloaded here.
If you need advice on any aspect of commercial property service charge agreements and management, please contact me at email@example.com or call 0161 672 1514.
As law firms continue to drive office demand, landlords and agents could benefit from closer relationships with the sector.