Commercial Service Charge Disputes

Commercial service charges are frequently an area of dispute between landlords and tenants. Whilst occupiers can accurately budget for their rent commitments, year-on-year increases in service charge costs and/or unexpected large year-end balancing charges can cause real financial difficulty.

The lack of control over levels of expenditure can undoubtedly increase an occupier’s view that its interests are not being properly recognised. For landlords, they will have obligations to carry out certain works to the building and provide specified services to the tenant and any under-recovery in service charge will hit them in the pocket.

Unlike in relation to residential dwellings, there is no statutory control over commercial service charges. In order to ascertain what services the landlord is obliged to provide, what costs it can recover and the timing of payment of charges it is necessary to carefully consider the terms of the relevant lease.

If a dispute arises it may also be useful to refer to the RICS Code of Practice on Service charges in commercial property (3rd edition). The Code has been prepared to promote best practice in terms of service charges for commercial properties in new leases or renewed leases.

At IBB Law, our Real Estate Dispute Resolution team is experienced in handling complex commercial service charge disputes, working for both landlords and tenants on a wide range of issues.

Drawing on our comprehensive understanding of commercial property law as a whole, we are well positioned to support you and help you find the best possible outcome, no matter your circumstances.

Complete support for commercial service charge disputes

Issues on which IBB’s Real Estate Dispute Resolution Team has recently advised include:

• Whether a landlord could recover the costs of major capital works under the service charge when the tenancy was in the last year of the term
• The ownership of a substantial service charge sinking fund
• The conclusiveness or otherwise of a service charge certificate
• The recovery of service charge arrears

Why choose IBB Law for help with commercial service charge disputes?

IBB Law’s commercial service charge dispute solicitors can offer you:

• Extensive specific expertise on commercial service charge disputes across our team
• Independently accredited expertise with our Real Estate Litigation expertise being ranked by leading client guide Chambers & Partners, with our broader Real Estate services also being ranked. The team is also ranked by the Legal 500 for Real Estate > Property Litigation
• Various members of our Real Estate team hold professional memberships, including with the Property Litigation Association (PLA), reflecting the high standards of our lawyers

Discuss your case with our experts

Our experts in commercial service charge disputes are available in Uxbridge, Chesham, Reading and Ascot.

For commercial service charge disputes advice, you can call one of our legal offices directly or fill in the enquiry form on our contact page and one of our legal team will call you.

Please note: our legal team are unable to provide legal advice without charge. We will provide you with a pricing proposal at the outset and we usually require monies on account before commencing work.

How our commercial service charge dispute solicitors can help you

Support for commercial landlords

The fees for commercial property maintenance and emergency repairs will often be included under the terms of the commercial lease. Landlords seeking to enforce this contractual obligation can often be faced with resistance from tenants who do not agree with the specific details of the lease or what the commercial service charge should cover.

Our commercial service charge dispute solicitors work directly with commercial landlords to provide tailored advice that helps them recover service charges where necessary.

Where required, we can also review leases which are already in place and advise you in relation to any lease that is already in place.

Support for commercial leaseholders

As a commercial leaseholder, it is important that you understand your rights and what obligations your landlords have towards you. In situations where you believe that you are being overcharged, or a commercial landlord has not completed the work you have been charged for, you may be able to bring forward a claim.

Common questions about commercial service charge disputes

What are service charges?

Commercial property service charges are made by a commercial leaseholder to the landlord. They are used to cover the cost of any services a landlord is obliged under the terms of the lease.

Typically, service charges will relate to actions such as the general maintenance and repair of the property, as well as general improvement.

Can a tenant dispute a service charge?

To dispute a commercial service charge, it must be shown that it is not compliant with the express terms in the relevant lease.

Our solicitors can advise tenants who wish to challenge a commercial service charge, advising on whether there is a case to be made and what the best course of action is likely to be in each instance.

What expenses can a landlord cover as a service charge?

Expenses that can be covered as a service charge include, but are not strictly limited to:

• General maintenance
• Repairs
• Buildings insurance
• Lift repairs
• Cleaning shared areas (e.g., hallways in office buildings)
• Central heating repairs

How can I resolve a commercial service charge dispute?

There are a range of potential remedies to service charges, with the most appropriate method depending on the circumstances.

Negotiation and techniques of alternative dispute resolution may be possible in some cases, helping to keep time, disruption and expenditure to a minimum. However, if a resolution cannot be found, taking a matter to court may be necessary.

When are service charges payable?

The terms of the lease will usually stipulate when a service charge should be payable. In many cases, the charge will be payable once or twice a year, at the beginning of either the calendar or financial year.

Some leases may allow for a service charge to be payable in advance of a landlord incurring costs. Recovery in arrears may also be possible.

How are commercial service charges calculated?

The terms of the lease will usually define how the service charges should be calculated, including how the cost is divided up between the tenants in the building. The underlying principle of a service charge is to ensure that the landlord does not profit from any tenant contributions.

Discuss your case with our experts

Our experts in commercial service charge disputes are available in Uxbridge, Chesham, Reading and Ascot.

For commercial service charge disputes advice, you can call one of our legal offices directly or fill in the enquiry form on our contact page and one of our legal team will call you.

Please note: our legal team are unable to provide legal advice without charge. We will provide you with a pricing proposal at the outset and we usually require monies on account before commencing work.