Before 2007 a number of commercial property occupiers complained that they were not getting value for money from service charge payments and that concerns were not being acted upon by commercial property managers.
The RICS noted these concerns and on the 1st April 2007 published a Code of Practice for its members called ‘Services Charges in Commercial Property’.
On the launch of the 2007 Code the RICS commented:
“Poorly managed service charges are a frequent cause of disputes between owners and occupiers. We hope that this industry endorsed Code will provide a clear set of recommendations which, if implemented will benefit all sides.”
The code has been endorsed and followed by members of the British Property Federation, British Retail Consortium and the Property Managers Association.
Having been in use for almost four years the 2007 Code attracted criticism that it was too prescriptive and not relevant to all leases. The concern was that the code had to cover all types of commercial property from 1m sq ft shopping centres to 500 sq ft industrial units.
For the 2011 update the RICS have broken the code down into 11 ‘core principles’ which demonstrate best practice in commercial property management. All of these can be applied to either a small single occupier management instruction or very complex service charges in large multi-let developments.
The first four ‘core principles’ deal with providing value for money, transparency, reporting in a timely manner and ensuring commercial property management fees reflect a reasonable costs to undertake the level of management required.
Head of Property Management, Geoff Springthorpe, Holloway Iliffe & Mitchell said:
“We are always talking to property owners and occupiers to ensure that the services provided reflect best value for money when business cash flows are under pressure”
A new addition to the code deals with the existing premise of a ‘Duty of Care to Occupiers’ but enforces this by ensuring that the standard and cost of services provided meets the expectations of the occupiers.
The following six ‘core principles’ deal with standardised financial reports allowing charges for different buildings to be easily compared, setting up separate interest bearing accounts, ensuring new leases are drafted to be compliant, support for alternative dispute resolution and occupiers responsibilities.
Craig Powell, Associate Director, Holloway Iliffe & Mitchell commented:
“Experience from our own management portfolio across Hampshire, Dorset and West Sussex shows owners and occupiers paying much closer attention to the level of service charges as these directly affect company overheads and how competitive the property when being advertised for sale or let.”
“It is very important that the level of services are carefully considered as one format cannot be used for every type or size of commercial property”
“The new RICS Service Charge Code should make service charges more transparent and allow easy comparison of property management charges when businesses are considering acquiring new premises or are looking to review existing arrangements”
The RICS noted these concerns and on the 1st April 2007 published a Code of Practice for its members called ‘Services Charges in Commercial Property’.
On the launch of the 2007 Code the RICS commented:
“Poorly managed service charges are a frequent cause of disputes between owners and occupiers. We hope that this industry endorsed Code will provide a clear set of recommendations which, if implemented will benefit all sides.”
The code has been endorsed and followed by members of the British Property Federation, British Retail Consortium and the Property Managers Association.
Having been in use for almost four years the 2007 Code attracted criticism that it was too prescriptive and not relevant to all leases. The concern was that the code had to cover all types of commercial property from 1m sq ft shopping centres to 500 sq ft industrial units.
For the 2011 update the RICS have broken the code down into 11 ‘core principles’ which demonstrate best practice in commercial property management. All of these can be applied to either a small single occupier management instruction or very complex service charges in large multi-let developments.
The first four ‘core principles’ deal with providing value for money, transparency, reporting in a timely manner and ensuring commercial property management fees reflect a reasonable costs to undertake the level of management required.
Head of Property Management, Geoff Springthorpe, Holloway Iliffe & Mitchell said:
“We are always talking to property owners and occupiers to ensure that the services provided reflect best value for money when business cash flows are under pressure”
A new addition to the code deals with the existing premise of a ‘Duty of Care to Occupiers’ but enforces this by ensuring that the standard and cost of services provided meets the expectations of the occupiers.
The following six ‘core principles’ deal with standardised financial reports allowing charges for different buildings to be easily compared, setting up separate interest bearing accounts, ensuring new leases are drafted to be compliant, support for alternative dispute resolution and occupiers responsibilities.
Craig Powell, Associate Director, Holloway Iliffe & Mitchell commented:
“Experience from our own management portfolio across Hampshire, Dorset and West Sussex shows owners and occupiers paying much closer attention to the level of service charges as these directly affect company overheads and how competitive the property when being advertised for sale or let.”
“It is very important that the level of services are carefully considered as one format cannot be used for every type or size of commercial property”
“The new RICS Service Charge Code should make service charges more transparent and allow easy comparison of property management charges when businesses are considering acquiring new premises or are looking to review existing arrangements”
