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There are substantial differences between residential and commercial leases.
Residential service charges are the subject of substantially more legislation and rules than those of commercial leases. Although there are the RICS Guidelines in respect of service charges for commercial leases they are essentially a matter of contract. This means that it is particularly important to review the lease in detail when considering the obligations for commercial property leases.
Before considering the differences between commercial and residential property service charges it is sensible to clarify exactly what a service charge is.
It is essentially a payment made by the tenant to the landlord, in addition to rent, for costs incurred in providing services in relation to the property.
A lease will usually specify services the landlord is required to provide. In addition any services which the landlord may provide but has no duty to do so. If the landlord chooses to provide the services the tenant must reimburse the landlord through the service charge.
David Richards, Senior Associate in Brethertons Defended Litigation Team has written a white paper which sets an overview of what is necessary to comply with the relevant legislation and contractual obligations for both residential and commercial leases.
The contents of the white paper, covers: