29 Jan 19 by Anna Simpson
What is a service charge? If you occupy an industrial unit on an estate, or an office suite in a multi-let building then you will probably pay a service charge. A service charge covers the cost of running the building or estate, and maintenance to communal or shared internal and external areas.
What does it cover? No two service charge budgets will be the same, but generally an office service charge might include: roof repairs, lift servicing and repairs, grounds maintenance, fire alarm, lighting in the communal areas, cleaning of the common areas and toilets, management fee, concierge service, window cleaning, etc. For an industrial estate the service charge might include: estate board signage, external lighting, security, grounds maintenance, repairs to estate roads/gateways etc.
You should ask for a service charge budget which should detail each item and the anticipated cost for this. It is worth checking to see whether any utilities to your demise are included within the service charge budget (often there might be one water supply to the building or estate, or one heating system for a building) this may make the service charge look higher initially but can save you money in the long run.
Can I negotiate a lower service charge? Unlike rent the answer is generally, no. This is the cost of running the estate or building so the landlord would be making a loss by allowing you to pay less. Some landlord’s will consider capping the service charge, which means putting a limit on the amount you will contribute.
How often do I pay service charge? Usually on a quarterly basis, but this will be detailed within your lease.
How is the amount each tenant pays calculated? This will be worked out on a proportional basis. For example, in a 4,000 sq ft building where all tenants occupy 1,000 sq ft each then the service charge will be split equally four ways. If, however there are 3 tenants within the 4,000 sq ft building and tenant A occupies 2,000 sq ft with tenants B & C occupying 1,000 sq ft each then tenant A will be responsible for 50% of the service charge with B & C each responsible for 25%.