Service charges can be a contentious area in commercial property leases. A typical Landlord’s objective is to recover from tenants all costs relating to common area maintenance and repairs/renewals. Tenants are concerned to ensure that the recharging of these costs is done properly and transparently and that appropriate apportionment is carried out, without the Landlord seeing it as an opportunity to profit from the exercise.
Many commercial leases include the provision for accounts to be produced annually detailing contributions made and expenditure incurred. In more complex cases a sinking fund is set up to cover long-term major renewals.
Here at Andrew Idle Associates, we have just dealt with a major warehouse letting on a multi-occupied Complex in which, to get this key new occupier signed up, it was necessary to place a cap on the service charge during the duration of the lease. Tenants need to budget carefully and it is not helpful to them when there is an open-ended chequebook expected from Landlords who are not forthcoming with key information.
Andrew Idle Associates act for both landlords and tenants and over many years of experience we have gained an appreciation of both points of view and, hence, can help in negotiations, enabling lettings to be successfully brought over the line.