The challenges of 2020 are clear to all and the impact will remain throughout 2021, bringing cost control in to sharp focus. When it comes to Service Charges, the RICS Professional Statement provides that occupiers should be consulted on budgets and property managers “should ensure that the standard of service provision (and therefore cost to occupiers) does not unnecessarily exceed the reasonable requirements and needs of occupiers”.
Tenants will be struggling to deal with occupational costs and many landlords will no longer be either able or willing to fund a gap in income versus service costs incurred. Added to that, landlords will have an increasing service charge liability through voids and shortfalls from capping provisions and all-inclusive rents. So, it is in all parties’ interests to limit service charges in the short term for 2021 as well as looking for longer term opportunities.
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