In an article published by RICS it is expressed that rising costs will put pressure on the facilities management sector over the next five years.
The BCIS five-year (3rd quarter 2019 to 3rd quarter 2024) forecasts for the facilities management sector are:
- maintenance costs to rise by 19%
- cleaning costs to rise by 26% and
- energy costs to rise by 6% (based on annual averages 2018 to 2023) *.
Find out more here.
The RICS Professional statement – Service charges in commercial property – came into effect on 1 April 2019 with the aim of improving standards, fairness and transparency in the management of service charges and reducing the causes of disputes.
Joanna Crofts of RICS (registered institure of chartered surveyors) explains the benefits of the new rules for both tenants and landlords, what the global property consultancy has seen to-date, and outlines the changes that have become mandatory.
Read more here.
From 1 April 2019, the Royal Institute of Chartered Surveyors (RICS) will introduce their new Service Charge professional statement affecting landlords and tenants of commercial property.
The changes will apply to RICS members and regulated firms throughout the UK. The new service charge requirements are more prescriptive than the current regime and set out mandatory requirements for landlords. And while much of the guidance remains the same as the previous Code of Practice, there are a number of updates that will affect those in the industry.
It will also have the regulatory effect of formalising the Code within the RICS best practice framework.
The new changes are particularly noteworthy for those involved as disputes between landlords and tenants often relate to the level of service charges levied. Therefore both parties — landlords and tenants — will need to be aware of the requirements of the updated service charge regime.
Find out more from this article published by Capital Law.
With the New Year fast approaching, Kathryn Copeland, Commercial Real Estate associate, reviews the key developments in commercial landlord and tenant law in 2018.
The article, titled ‘A roundup of 2018‘ covers developments surrounding:
- A new service charge code
- The Electronic Communications Code
- Electronic signatures at the Land Registry
- and various case law development.
Kathryn also briefly looks ahead to 2019 and reviews what might be next on the agenda, including radical changes in residential leasehold, and the potential impact of Brexit.
‘This article was first published in Property Law Journal (December 2018/January 2019) and is also available at lawjournals.co.uk’.
Please note that the views, thoughts, and opinions expressed in this article belong solely to the author and do not necessarily reflect the views, policy or position of Websters.
Andrew Graham-Smith of Womble Bond Dickson writes about the new RICS Statement, which will come into effect from 1st April 2019.
In September, the Royal Institution of Chartered Surveyors (“RICS”) published its latest Professional Statement, entitled “Service Charges in Commercial Property” (the “Statement”). The Statement re-states updates and replaces the existing Service Charge Code (the “Code”), and has the regulatory effect of formalising the Code within the RICS best practice framework. The Statement is effective from 1 April 2019 and will apply to all Service Charges across the UK.
The Statement sets out best practice in the management and administration of service charges in commercial property and provides mandatory obligations that RICS members and regulated firms engaged in this area must comply with or potentially face disciplinary proceedings.
The Statement is not capable of overriding the terms of a lease, however, service charge provisions must be read in conjunction with the Statement to help identify the best interpretation of the lease provisions, and ensure compliance with the Statement as far as possible.
The Statement has increased the regulatory weight of the Service Charge Code, and as such the mandatory requirements and core principles should be carefully considered by professional practitioners who advise on the terms of new commercial leases, or who are involved with service charge provisions in leases.
To read more on the Aims & Objectives, Mandatory requirements, Core Principals & Guidance Click here.
Tessa Shepperson of The Landlord Law Blog writes about how leases fall under contract law.
As well as being an ‘estate in land’ (looked at in part 1) a lease or tenancy is also a type of contract. So we need to take a look at contract law.
Contract law is a very important area of law which affects all of us in our lives every day.
A contract is an agreement about something which is enforceable by law. To create a contract you need to have three things:
- An offer
- Acceptance of the offer, and
- Consideration going both ways.
A lease or tenancy is created in the same way as a contract, by one party making an offer and the other party accepting it.
Normally there is a written document but not always (more on this later). The consideration, so far as the tenant is concerned, is the rent, and so far as the landlord is concerned, is the property.
The rent does not have to be a market rent. Nor does it have to be money. For example, in the past (and when spices were a lot more valuable) a peppercorn was sometimes used for rent. A ‘peppercorn rent’ is a phrase now used to indicate a payment which is of low value but sufficient to create the tenancy / lease.
Click here to read more
In an article published by Shopping Centre the following has been reported;
Following the House of Fraser CVA (company voluntary arrangement) and the collapse of Poundworld and Fabb Sofas into administration, the British Property Federation has called on government to conduct an urgent review.
The property industry body believes the CVA process is now being mis-used, and it highlights a number of faults in the current system including:
- Lack of transparency
- Unfair discrimination between different creditors
- The lack of regulation to ensure CVAs are used appropriately and to drive good practice
To read more click here.
In a recent post from News on the Block Clare Brady of Brady Solicitors highlights 5 factors to be considered before combining service charge and ground rents. She writes;
When acting for an RMC or Right to Manage Company, managing agents will often be told by the freeholder to allow them to deal with the service charge arrears. The benefits of such an approach are clear from the ground rent owner’s perspective, but is it in the best interests of the management company, the leaseholders and the block?
With ground rent recovery increasingly in the spotlight, both managing agents and freeholders must take care to ensure recovery procedures are legal, in line with the terms of the lease and – importantly – in the best interests of the RMC and leaseholders.
Click here to read the full article.
The Royal Institution of Chartered Surveyors (RICS) announced in October 2017 that a fourth edition of the Service Charge Code for Commercial Property was under deliberation.
Ahead of it’s proposed launch on 01 April 2018 Monika Holyst of Freeths Solicitors has provided some insight into the draft fourth edition of the Code.
Read the full article here.
One of the main issues faced by landlords making a repair or replace decision concerns the recovery of such costs through the service charge.
In a recent article Zara Saunders of Shoosmiths comments that Service charge recovery can be a matter fraught with difficulty, even in the sphere of commercial property where no statutory limitation applies. Property owners may only recover costs to the extent permitted by a lease and issues frequently arise regarding whether an item of expenditure is one of repair or improvement and to what extent recovery might be permissible. Tenants will generally expect to pay the cost of repairs but not improvements.
Read the full article here.