Monday, 12 March 2007

Getting a better deal for tenants

Commercial tenants facing huge increases in service charges may be able to fight back, according to a Shropshire solicitor.

Sarah Heath, who leads the Commercial Property Team at Martin-Kaye Solicitors, in Telford, said some small businesses had reported increases of over 50 per cent in their annual service charge.

“The problem is that service charges in commercial leases, unlike residential leases, are unregulated.

“So the starting point is to make sure when you negotiate your original lease, you agree acceptable terms. If possible, try to agree a set limit on the service charge payable each year, or at least agree a percentage.

“If that wasn’t done at the time, read through your lease carefully – if it fails to mention service charges at all, you can refuse to pay your landlord’s demand.

“But it’s more likely that it will contain a service charge clause, so you should check what it covers."

Sarah said the clause should include phrases such as “costs and expenses reasonably and properly incurred”.

“If it does, you can at least challenge the landlord’s demand, and if the charges are unreasonable, you don’t have to pay it.

“The way forward is to request copies of invoices the landlord claims to have paid, for example for redecorating, and get at least three other quotes so you can compare them before you challenge the charges he’s asking for.”

Sarah said The Royal Institution of Chartered Surveyors was set to introduce changes in April this year to its voluntary code, in a bid to give clearer guidelines on what a landlord can and can’t do.

“But as this is only a voluntary code, it’s difficult to see how this can be regulated – the best thing to do is take expert advice to make sure the charges you’re being asked to pay are fair.”

Pic: Sarah Heath - Head of Commercial Property - Martin Kaye Solicitors