Service charges in commercial property 1st edition, September 2018
The 4th version of the “RICS Service charge code” released on 17th September 2018 is called Service charges in commercial property 1st edition, September 2018 . This is the first time it has the status of an RICS Professional Statement.
RICS members and firms regulated by the RICS must comply with professional statements in order to remain professionally competent. When an allegation of negligence is made against a surveyor, the court is likely to take into account any relevant professional statements published by RICS in deciding whether or not the surveyor acted reasonably.
The new Service charges in commercial property 1st edition, September 2018 is aimed at improving standards, promoting best practice, uniformity, fairness and transparency in the management and administration of service charges in commercial property
One of the key points contained in the new 1st edition, is that owners and managers must ensure that a service charge apportionment matrix for their property is provided annually to all tenants. This new mandatory requirement which will take effect from 1st April 2019 will not be welcomed by certain landlords and managing agents who so far have simply refused to provide an apportionment matrix to their tenants. Other mandatory requirements contained in the Service charges in commercial property 1st edition, September 2018 include but are not limited to :
1) Annual issuing of budgets and reconciliations with appropriate explanatory notes.
2) All expenditure that the owner and manager seek to recover must be in accordance with the terms of the lease.
3) Requirement for all service charge monies (including reserve and sinking funds) to be held in separate or (or virtual) bank accounts.
4) Requirement for a signed statement of actual expenditure provided annually.
There will also be additional guidance on transparency and disclosure, sinking, reserve funds, handovers and guidance on dealing with service charge queries and disputes.
Get in touch if you have any questions about the new code and how it affects you. We can help landlords and managing agents get code compliant in time for the 1st April 2019 deadline.