Did you know that service charges are one of the main reasons why there are conflicts between commercial landlords and tenants? Often the leaseholder disputes service charges that come as a surprise and as such, are deemed unreasonable.
If the roof of a shop or restaurant gets repaired by the landlord, the costs may be included in the service charges billing section. This charge could be included in the invoice as an extra but is it a reasonable charge? There could also be a leak that the landlord repaired, or any other maintenance repairs done to the property. Would repairs be considered reasonable charges?
Check carefully how charges are calculated. The ‘charges’ clause in your leasing agreement should have narrative that lists exactly what is included in the lease charges. What are the charges specified in the lease agreement and what is included in the service charges? If roof repairs aren’t included in the charges covered by the tenant, then you could dispute this if it appears as an extra in the landlord’s billing.
Service charges in an invoice are subject to statutory controls. Landlords can’t charge a tenant for repairs not stipulated in the lease agreement. If repairs are carried out by the landlord, then these should be paid by the landlord. Any repairs expected to be paid by the tenant, should be clearly stated in the lease agreement.
The landlord can recover charges to the extend that they are reasonable. If the charges aren’t reasonable, then the tenant can certainly dispute those charges. First of all, the lease agreement needs to stipulate which repairs are covered by the landlord and which are covered by the tenant. Secondly, landlord and tenant need to establish who’s responsible for damages caused. Thirdly, have the works been carried out to a reasonable standard?
Please call our office for a no commitment discussion to find out what your rights are as a landlord or tenant. We’ll be able to assess the situation and let you know if the extras in the service charges are reasonable or not. SG
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