Home » Service Charges

Service Charges

What is a service charge?

A service charge is a charge levied by the landlord on tenants for services provided to a property – for example, lighting and heating common areas, maintaining the car park.

Why would you have a service charge?

A service charge is most likely to be found where the property occupied by the tenant forms part of a building or part of an estate owned by the landlord.

The landlord wants to try to ensure that rents obtainable from such properties are not reduced by the landlord having to pay for various services provided to the individual units or common areas of the building or estate.  This is often in direct conflict with the tenant’s aim which is to carve out items from the service charge that it thinks the landlord is liable to pay for.

What can the landlord charge for?

The landlord cannot charge for items which are not specified in the lease. A comprehensive list of services should be included in the lease. Tenants and landlords should be having discussions upfront on potential issues under the services provided so that only relevant services are included.

A tenant will not generally be expected to pay to upgrade or improve the landlord’s property as opposed to repairing it.

Do charges have to be reasonable?

Unless there is an express term which states that charges are to be fair and reasonable, reasonableness will not be implied.  This does not mean that the landlord has the ability to charge whatever it wants as a court would likely find against a landlord who carried out services to the highest possible standard regardless of the nature of the property and sought to recoup this from the tenant.

How does a tenant know how much the service charge will be?

The tenant should ask for and the landlord should provide an estimated costs schedule to the tenant of the anticipated service costs.

The service costs will then be payable by the tenant on an estimated basis.

At the end of the relevant period, the landlord will confirm to the tenant the actual costs of the services and whether the tenant has overpaid or underpaid for these. If additional payments are due these will be requested from the tenant. If there has been an overpayment, this will usually be used as credit against the next service charge payment due.

Drafting points

The content of a service charge clause depends on the relative bargaining strength of the parties, but it should include as a minimum:

  • A definition of the services which can be charged for;
  • a clearly defined obligation on the tenant to pay towards services which shows how the tenant’s proportion of the overall cost will be calculated;
  • which services the landlord is obliged to provide including essential services and other services which may be provided; and
  • the mechanics of the service charge which typically will include: dates for payment, how the service charge accounts are prepared and a mechanism for resolving disputes.

Although it is impossible to guarantee that a dispute will not arise at some stage, the risk can be reduced where the lease terms are clear and the parties know precisely where they stand in relation to the provision of services and who is liable to pay for them.

If you need any advice on service charges, please contact a member of our commercial property law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.

To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.

Contact Our Team
Catherine Burke
View Profile
Ciara O’Brien
Trainee Solicitor
View Profile
Donald Gray
View Profile
Elin Davies
View Profile
Elliw Jones
View Profile
Gareth Wedge
View Profile
Julia Bridge
Legal Director
View Profile
Lisa Evans
View Profile
Lorna Fraser
View Profile
Oliver Morris
Senior Associate
View Profile
Sarah Price
Senior Associate
View Profile
Stephanie Kendall
Trainee Solicitor
View Profile

I have worked with Darwin Gray for a number of years and the level of service, professionalism and timely response is second to none. I would highly recommend Darwin Gray to any business.”

Becs Beslee
Dice FM Ltd

Darwin Gray have provided us with a first-class service for many years now. They really take the time to understand our business and develop relationships which results in advice and support that is contextualised and effective.”

Rebecca Cooper
ACT Training

We have worked with Darwin Gray for several years and have always found their services and advice to be first class.”

Karen Gale
Stepping Stones Group

An extremely professional and sincere company who make time for your queries and understand the need to break down certain facts and information to ensure everything is understood perfectly. I would highly recommend the company to anyone looking for any type of legal advice”

Gwawr Booth
Portal Training Ltd

PSS has worked with Darwin Gray for many years. We have always received an excellent service. Prompt and professional advice and support.”

Ledia Shabani
Property Support Services UK Ltd

We have used several departments within DG recently and we have been very pleased with an effective, efficient and down to earth service. Very happy thus far and I expect that we will continue to use DG.”

Guto Bebb
Farmers’ Union of Wales

Darwin Gray offer us truly superb services. Very professional, quick and services available bilingually which is very important to us, highly recommend.”

Iwan Hywel
Mentrau Iaith Cymru

My “go to” in urgent and time sensitive cases for direction, support and advice. The team are quick to respond to calls or emails for advice and support on all matters. Always explain complex matters in a way a lay person can easily understand.”

Margot Adams
Guarding UK Ltd

Darwin Gray have acted for myself and my company over a number of years and at all times we have been treated with a professional manner yet maintain a common-sense approach at all levels. We couldn’t recommend them more highly.”

Simon Baston
Loft Co

We have been clients of Darwin Gray for many years; they’ve always dealt with all of our legal matters with such professionalism. They work around us, even during awkward hours, and we feel confident we can always rely on them.”

Louise Williams
ACT Training

Darwin Gray has been acting for Siltbuster for more than ten years. We would have no hesitation in recommending Darwin Gray to other organisations small or large.”

Richard D Coulton
Siltbuster Ltd

From the very first conversation, I had no doubt that Darwin Gray should be the firm to receive our instructions on this matter. I would have no hesitation in recommending Darwin Gray.”

Sandra Warr
Tomos TV

We regularly instruct Darwin Gray. Their service in dealing with our transactional matters and disputes is always professional, prompt and efficient.”

John Poppleton
Absolute Property Management Solutions Ltd

Darwin Gray guided me through a long and extended process that would have been much more difficult had it not been for their patience and constant support.”

Ifan Lewis

Excellent and efficient service. Great result achieved, highly professional and transparent on pricing. Would recommend.”

David Stevens

Superb legal service provided. Exceeded expectations. They went above and beyond in order to provide the best service possible.”

Huw Pickrell

Very professional and understanding. They were a calming influence in a very troubling situation and they brought it to a very successful conclusion”

Rachel Jones

We have used Darwin Gray and have been seriously impressed. The personal approach is what Darwin Gray are excelling on and is the reason why we will continue to work with them in the future.”

Cadwyn Housing Association