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Standards to tackle unfair commercial property service charges published

Written by Peter Davison on .

RICS HQRICS HQNew regulations that will ensure service charges to the tenants of commercial properties are transparent, upfront, and fair have been published by RICS, the Royal Institution of Chartered Surveyors.

The mandatory requirements – launched this week and enforceable from April next year – also seek to ensure that any costs incurred are in accordance with the terms of the occupational leases.

RICS has worked with major property bodies representing owners, occupiers and managing agents alongside the professional bodies for accountants and lawyers to produce the recommendations, with balanced requirements that reflect the needs and opinions of landlords and tenants and the specific considerations of different sectors.

Reflecting on the publication of the new regulations, Andrew Kilpatrick of Swindon-based specialist commercial property agent Kilpatrick & Co said: "Whilst most reputable managing agents have already been operating in accordance with the code, the new guidance is useful.

"For example, it will now be clear to landlords that where an error is discovered in the service charge accounts, managing agents will be under an obligation to correct the error, without undue delay.

"It also makes clear that where a tenant is disputing a service charge, any withheld payment should relate only to the issue in dispute and the tenant should not withhold the whole amount.

"All new leases, including lease renewals, should include provisions for alternative dispute resolution by mediation, independent expert determination or arbitration, instead of court action.”

Service Charges in Commercial Property is available from the RICS website.

Kilpatrick & Co can be contacted at www.kilpatrick-cpc.co.uk