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Service Charges: RICS Code of Practice
For help in resolving disputes related to service charges, call us on 0345 872 6666 or complete the online enquiry form on this page.
Poorly managed service charges in commercial property are a frequent cause of dispute between owners and occupiers.
Some four years after launching the first edition of its Code of Practice for Service Charges in Commercial Property, the RICS has launched its second edition. The new Code came into effect on 1 October 2011.
Section 1 of the Code sets out a list of 11 core principles, including:-
Value for money - services should be procured on an appropriate value for money basis and service quality should be appropriate to the location, use and character of the property
Not for profit – service charge operations should not be run to make a profit save for charging a reasonably commercial management fee to reflect the actual costs of managing the services
Apportionment – the basis and method of apportionment of service costs should be fair and reasonable, reflecting the availability, benefit and use of services
Transparency – transparency in the accounts, explanatory notes, policies and day-to-day management is essential
Communication – there should be regular consultation and communication between managers and occupiers over the standard and quality of services
Duty of care – the owner and/or manager owe duties of care to both occupiers and the owners
Right to challenge – all new leases (including renewals) should allow either party to require resolution of disagreements through the use of alternative dispute resolution (ADR) and there should be nothing to stop the parties from using ADR even where it is not expressly provided for in the lease.
Section 2 of the new Code expands on the section 1 core principles and includes detailed guidance on how they should be implemented.
The Code is endorsed by leading industry bodies and builds on the themes of the first edition with greater emphasis on communication, timeliness and transparency. Whilst compliance with the Code is not compulsory, it does set out what is considered to be best practice.
Whether the new Code will achieve its aim of removing service charge as an area of dispute between owners and occupiers (without it being made compulsory and given legal standing), only time will tell.
Speak to us
The commercial property team at JMW are experts in dealing with and resolving disputes in relation to service charges. If you are involved in such a dispute or require advice in this often complex area of law, get In touch with the team.
Call us on 0345 872 6666, or if it is more convenient, complete the online enquiry form at the top of this page and we will contact you as soon as we can.