Service Charge Review Leads to £35,000+ Savings for Retail Park Tenants
As part of our onboarding process, we work with new clients to quickly identify any pressing issues across their portfolios. One national retailer highlighted a retail park in Derbyshire where there were unusually high service charge costs. Believing a collaborative approach would be more effective, they suggested involving the other occupiers. Assure was subsequently appointed to represent all tenants and review their charges.
The 2025 service charge budget was issued six months in advance of commencement. Upon review two cost categories raised major concerns, management fees and electricity. We challenged the budgeted costs and following negotiations with the Landlord, our team secured savings of over £35,000.
Budget Breakdown & Assure Index Comparison
The site in Derbyshire is approximately 12,500 sq. ft., includes 20 car parking spaces and features three floodlights. The Landlord manages the site directly, our review of the 2025 budget raised some red flags.
The 2025 service charge budget was set at £37,500, with the two major cost allocations:
- £20,000 in management fees
- £8,000 in electricity costs
The team used the Assure Index to benchmark the major cost headings, which appeared disproportionately high for a site of this size. Based on the Index, we’d typically expect management fees and electricity costs to each be in the region of £1,500.
Engaging with the Landlord
We contacted the Landlord to request a detailed breakdown of the management fees, specifically to ensure there were no hidden auditing or accounting costs. We also requested a copy of the current electricity contract and details of amounts paid by the Landlord.
The Landlord advised that the management fee covered their time spent managing the site. However, the tenants believed that part of the cost was linked to the Landlord travelling from abroad to visit the site. Despite our request, no itemised breakdown of the management costs was received and there was a general sense that the Landlord was using the fee as an opportunity to profit from the service charge.
Upon reviewing the 2023 year-end electricity receipts, we discovered that the Landlord had incorrectly rebilled gross amounts through the service charge, rather than the net amounts. This mistake led to the tenants effectively paying VAT twice on their electricity charges.
Negotiations and Outcomes
After extensive communication with the Landlord and meetings with the tenants, we successfully achieved the following outcomes:
- Management fee reduced from £20,000 to £3,500
- Electricity costs reduced from £8,000 to £750
- VAT credits secured for the 2023 year-end charges
- 2024 saw a significant underspend
- Total Savings to Date: £35,696.13
This case highlights the importance of scrutinising service charge budgets and requesting a detailed breakdown when costs seem unusually high. By leveraging our expertise and insights from the Assure Index benchmarking data, our client and their fellow tenants were able to achieve significant cost reductions and gain greater financial clarity moving forward.
Looking for Expert Help for Managing Your Service Charge Costs?
If you’re an occupier and have concerns about your service charge costs, Assure can help. Our proactive team can identify potential savings and ensure your service charges are allocated fairly. Complete the contact form below and one of our specialists will be in touch to discuss how we can help.