Have you started implementing any of the adjustments made in the Service Charges in Commercial Property Code of Practice yet? They were published in May but, don’t panic, you have until 1 October to effect the changes, revised from the 2006 edition.
The code was produced by the Royal Institute of Chartered Surveyors (RICS), in consultation with a group of UK property developers including the British Property Federation, British Retail Consortium and the Property Managers Association. It is intended to tackle ongoing service charge disputes and a perceived lack of transparency in calculations by encouraging greater interaction between commercial property owners, occupiers and managing agents.
The code is divided into eleven core principles, which are summarised below:
Service costs: fair and justifiable cost of services where the owner does not profit in any other way than through a reasonable management fee.
- Allocation and apportionments: the charging for and benefits from these services must be split in a ‘demonstrably fair’ way, with commercial property managers making a full apportionment matrix available.
- Certification: placing an emphasis on a ‘duty of care’ in approach and production of expenditure accounts.
- Communication and consultation: while the commercial property owner has the right to set the standard to which their investment will be managed, occupiers must be consulted as to the level and cost of maintenance they should expect.
- Duty of care: to the commercial property, its management and its tenants, with clear policies on what is required from each party.
- Financial competence: when dealing with service charge accounts, with appropriate management of all monies.
- Occupier responsibilities: towards paying service charges promptly and ensuring representatives in meetings have a suitable level of responsibility.
- Right to challenge/dispute resolution: by using alternative dispute resolution as an alternative to the courts to resolve disagreements.
- Timeliness: to promote positive working relationships and when issuing budgets to commercial property occupiers.
- Transparency: in notices of changes to plans and forecasts, thus reducing risk of dispute.
- Value for money: and appropriateness in service quality, relative to location, use and size of the commercial property.
The code is free to download at http://www.rics.org/servicechargecode.
