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Service charges

Q: For the past three years my practice has occupied a purpose-built premises owned by a third party developer. The landlord has put up the service charge from £2,800 three years ago to £8,000 per month. We occupy 935m2 of the building. Can you advise on average service levels?

A: It is difficult to give general figures as so much depends on the details in your lease and on what services are provided.

My firm manages around 25 medical centres where service charge levels measured on a m2 basis range from under £10 per m2 to just under £70 per m2.

At the lower level, the services provided will cover little more than external repair, decoration, building insurance and repairs and maintenance to hard landscaping.

At the higher level, services include the aforementioned plus internal decoration, repair, cleaning, maintenance and utilities costs for all shared and common areas.

Higher rates also apply especially when a building has more than one lift, requires the employment of managing agents, a caretaker and so forth.

Another possible cost factor is where the service charge includes a 'sinking fund'

contribution (monies put aside for future decoration and repairs).

You were paying about £33,600 a year, which breaks down to about £36 per m2, a rate that falls in line with the above. The current level of £96,000 a year or more than £100 per m2 is far outside the normal range.

I would be surprised if you have not received any explanation of this as under the various codes of operation, such as the Royal Institution of Chartered Surveyors', you should have been provided with a budget in advance and given the chance of making representations before any increase was applied.

Dependent on the wording in your lease document, this may or may not be required.

Such a sudden increase may relate to a major disrepair but, as your building is only a few years old, such disrepair should be covered under the building's warranty.

John Hearle

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