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propertylawyer
propertylawyer, Solicitor
Category: Law
Satisfied Customers: 285
Experience:  Property Solicitor with expertise in commercial and residential property transactions.
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We are in the last year of an office lease with a lease that

Customer Question

hi, we are in the last year of an office lease with a lease that has a service charge. landlord has recently whacked in a bill for external painting which exceeds the service charge (an additional £2.5k). is this a legitimate charge? lease says fair and reasonable contribution to building maintenance. service charge leapt from £2000 to £5500 in one year. no date is fixed for work. nor written proof of additional costs. painting external building is a known cost but this was never disclosed when we took on the lease. none of this seems neither fair nor reasonable.
Submitted: 1 year ago.
Category: Law
Expert:  propertylawyer replied 1 year ago.

What do the service charge provisions in the lease say?

Customer: replied 1 year ago.
i've attached it
Expert:  propertylawyer replied 1 year ago.

What is the definition of proper proportion and service expenditure please?

Customer: replied 1 year ago.
attached hereto definition of proper
Expert:  propertylawyer replied 1 year ago.

Thanks. Service expenditure?

Customer: replied 1 year ago.
attached. my question really is the notion of reasonable? is a three-fold increase without notice reasonable?
Expert:  propertylawyer replied 1 year ago.

Potentially it is reasonable if the landlord has an obligation to maintain/decorate the exterior of the building.

I cannot see from the snapshots whether you pay a sum on account of services to be performed or if the landlord can charge on an ad hoc basis. There should be transparency in what service is to be undertaken and its cost, the landlord should evidence so that tenants are aware if how the cost is made up (core principle of the rics service charge in commercial property code 3Rd edition). Managers are also expected to communicate adequately with occupiers.

If the landlord/manager fails to communicate and disclose quotes/estimates following a request and fails to justify the service charge demand you should have a right, set out in the lease, to challenge by use of alternative dispute resolution or referral to an independent expert, independent rics qualified surveyor.

It depends what the lease says on this, the rics code, referred to above, is merely guidance and best practice and cannot override the lease.

Potentially you may be contractually bound to pay - it depends on the construction of the lease and whether the lease contains a provision allowing you to dispute it.

It is difficult to comment by reference to the snapshots as clauses often cross refer. I would really need to review the lease in full. I am agreeable to review this for you as an additional service, if you agree.

Do you have any questions or queries in respect of my answer?

Expert:  propertylawyer replied 1 year ago.

also check rics service charges occupier guide 2011

Customer: replied 1 year ago.
thanks for your help. what's the extra cost for you to advise on the lease - at a point where i pay the extra or run up legal bills! although there is a point of principle here.
Expert:  propertylawyer replied 1 year ago.

This site works in $. I propose $35 to review the service charge provision.

Customer: replied 1 year ago.
ok, let's do that.
Expert:  propertylawyer replied 1 year ago.

Thanks, ***** ***** the proposal and then message me with the lease attached as a pdf. Att ha via the paperclip icon.

propertylawyer and other Law Specialists are ready to help you
Customer: replied 1 year ago.
hi, here's a copy of the lease
Expert:  propertylawyer replied 1 year ago.

Will it not attach. I am prohibited from using private email.

Expert:  propertylawyer replied 1 year ago.

Try to send in several parts.

Customer: replied 1 year ago.
Sorry, some sort of glitch my end, restarted browser and working. it's attached here.
gaivn
Expert:  propertylawyer replied 1 year ago.

Thanks. I have downloaded it. I will review and come back to you shortly.

Expert:  propertylawyer replied 1 year ago.

Ok. What you have is a basic lease based on the law society's business lease. Very rarely used by the profession due to its limitations.

The service charge is made up of the costs reasonably incurred by the landlord in performing the obligations in cl. C3 and in accordance with good estate management.

C3 sets out the services. Of relevance to the situation is the services of repair and deterioration of the common parts, structure, foundations, roof and exterior. The costs incurred must be reasonable.

A3.3 states you are to pay any shortfall between payments on account and the actual costs incurred.

A3.4 obligated the landlord to keep records, receipts, invoices. Quotations are not mentioned but it is totally reasonable to request to see any quotation for works to be undertaken.

If you consider the that the landlord is not acting reasonably then you can dispute the charge, you have a right to do so under cl. A3.5. Raise the dispute with the landlord first and allow 14 days for a response. If the landlord fails to respond or provide adequate information (do refer the the two guides I mention in previous posts for guidance) then you can refer the matter to a surveyor for determination.

The surveyor will be independent and act as an arbitrator. It may take guidance from the rics code but ultimately will be bound by the provisions in the lease. This means that the independent surveyor will determine if the decorating costs are reasonable.

There is no mention in the lease of how the independent surveyor's costs will be paid.

I hope this helps.

Customer: replied 1 year ago.
thanks so much for this. appreciated. i will think about it over the weekend.gavin
Expert:  propertylawyer replied 1 year ago.

No probs, all the best.