The RICS Service Charge Code in Practice

The RICS professional statement on service charges in commercial property sets the standard for how landlords and managing agents should run a service charge. Here is what it means in practice.

What the code is

The RICS professional statement on service charges in commercial property is a set of mandatory and best-practice requirements for RICS members managing commercial service charges. It is not a statute, but it reflects good practice and courts and tenants look to it.

The core expectations

• Recover only actual, proper costs the lease allows, with no profit to the landlord.
• Issue a budget to tenants before the service charge year begins.
• Provide certified accounts within a set period after year end.
• Give an apportionment matrix so each tenant can see how their share is calculated.
• Hold service charge monies, and any reserve or sinking fund, in a way that keeps them identifiable and, where required, on trust in a separate account.

Does it bind a landlord

The code binds RICS members professionally. A private landlord who does not use a RICS agent is not bound in the same way, but following the code is still the sensible standard: it is transparent, reduces disputes, and is what a well-advised tenant will expect. Where the lease and the code differ, the lease governs recovery, but the code guides how the process should be run.

Use it as your template

Even as a small landlord, running your service charge along the lines of the code, with a budget, accounts and a clear apportionment, is the easiest way to avoid arguments. See commercial service charges.

Does the RICS service charge code bind a private landlord?

It binds RICS members professionally. A private landlord not using a RICS agent is not bound in the same way, but following it is still the sensible standard.

What does the RICS code expect?

A budget before the year, certified accounts after year end, an apportionment matrix, and no profit to the landlord.