Service charge shock, advice welcome
Discussion
Would maybe have put this in SP&L but cannot so..........
Hoping for a bit of insight on a commercial unit I lease. It is in a mixed-use building, ground floor 3 x shops and 7 x flats above.
Having had my business here for 10 years with no problems, I signed a new 5 year lease with no brake clause in Sept 23. I was happy with the agreed rent and the landlord made a big deal (not in writing) that the service charge would reduce from approx 2.5k per year to 1k per year.
Over Easter I received an invoice and an email saying the service charge was increasing substantially from 1k to 10k per year due to maintenance required on the building and that this would be an ongoing amount.
My lease includes standard service charge clauses (tenant pays a fair proportion of costs for maintenance and repairs, etc.). The lease says I’m responsible for a share of costs, but it’s not clear how this level of major work is being justified or apportioned. The other retail units and residential tenants have all also received a similar invoice/service charge.
As far as I know the majority of the them simply cannot afford this increase.
I can cover the additional costs, but out of principle and preferring to have the money in my account I would really rather not as my lease ends in a few years I may choose to relocate.
Does this seem a fair increase in service charge?
I think all tenants are going to refuse to pay, in that case what is the likely outcome?
I did speak to my accountant as my company is LTD but she was unwilling to give me advice on simply dissolving the business and starting elsewhere under a different name, would this be an option bearing in mind the business is profitable?
I will have to appoint a solicitor any recommendations please?
Any advice welcome just trying to get an understanding on this before the s
t hits the fan. Deadline to pay 6 x months service charge in advance is end of June.
Happy to share more details if needed.
Thanks!
Hoping for a bit of insight on a commercial unit I lease. It is in a mixed-use building, ground floor 3 x shops and 7 x flats above.
Having had my business here for 10 years with no problems, I signed a new 5 year lease with no brake clause in Sept 23. I was happy with the agreed rent and the landlord made a big deal (not in writing) that the service charge would reduce from approx 2.5k per year to 1k per year.
Over Easter I received an invoice and an email saying the service charge was increasing substantially from 1k to 10k per year due to maintenance required on the building and that this would be an ongoing amount.
My lease includes standard service charge clauses (tenant pays a fair proportion of costs for maintenance and repairs, etc.). The lease says I’m responsible for a share of costs, but it’s not clear how this level of major work is being justified or apportioned. The other retail units and residential tenants have all also received a similar invoice/service charge.
As far as I know the majority of the them simply cannot afford this increase.
I can cover the additional costs, but out of principle and preferring to have the money in my account I would really rather not as my lease ends in a few years I may choose to relocate.
Does this seem a fair increase in service charge?
I think all tenants are going to refuse to pay, in that case what is the likely outcome?
I did speak to my accountant as my company is LTD but she was unwilling to give me advice on simply dissolving the business and starting elsewhere under a different name, would this be an option bearing in mind the business is profitable?
I will have to appoint a solicitor any recommendations please?
Any advice welcome just trying to get an understanding on this before the s
t hits the fan. Deadline to pay 6 x months service charge in advance is end of June. Happy to share more details if needed.
Thanks!
Mandat said:
Sorry, I can't advise on the service charge issue but have you considered your potential dilapidations liability when you do eventually decide to relocate?
Depending on your lease provisions, the liability could run into several tens of £1,000's.
Thanks for the reply, I hopefully have yes as the unit is in far better condition now than it was when I took it on. Depending on your lease provisions, the liability could run into several tens of £1,000's.
Not having a service charge cap is a nightmare, you’re then into a dispute as to whether or not the work is necessary or not and even if you run the clock down, they can get you later.
Plainly Landlords don’t get to just improve the premises at the cost of the Tenants, but it’s a minefield.
Dilapidations can be another eye opener, unless you’ve an agreed schedule of condition appended to the lease.
Plainly Landlords don’t get to just improve the premises at the cost of the Tenants, but it’s a minefield.
Dilapidations can be another eye opener, unless you’ve an agreed schedule of condition appended to the lease.
For those in residential units they will need to be served an s20 and have visibility of what work is required and multiple quotes for the work for anything requiring over £250 per leaseholder expenditure.
Major works cannot be Bundled in to a service charge. Leases should make clear what everybody is responsible for.
For a commercial unit you will need to read your lease or consult your solicitor.
Major works cannot be Bundled in to a service charge. Leases should make clear what everybody is responsible for.
For a commercial unit you will need to read your lease or consult your solicitor.
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