Yet Another Success!
Thursday, April 29th, 2010
SMART have successfully worked for another tenant based client recently – to audit charges made by the landlord on their commercial premises.
Between management fees and incorrectly apportioned service charges – SMART has recovered £17,000 for the tenant in overpaid fees across a three year period, and successfully negotiated a fully capped 19% reduction in overall fees for 2010/11.
So frequently this is completely overlooked by tenants and they just go along paying whatever is asked of them. I would urge all commercial tenants to carefully examine the audited figures supplied by the Management Co, or the Landlord’s representative. They can be quite wrong when you start digging into it!
Service charges in the UK have always been considered an enigma. Though the tenant pays for services within the building they do not instruct the contractors, or have control over either the amounts spent – or standards of service. It is of course in the landlord’s interest to charge his tenants for building improvements which ultimately enhance the landlord’s value in the building.
SMART will thoroughly investigate the arrangements between all parties; during this process the following brief list is considered to be ‘essential’ for auditing purposes.
- Common parts and or reception upgrading
- External works
- New fittings (Why, where and to whose overall benefit?)
- Works to vacant areas and not common parts
- New CCTV (Frequently charged elsewhere)
- Erroneous percentages used to assign costs
- Building Defects
- Fees charged by Managing agents or Management Co directly
- Initial set up fees
- Cappings in the lease not taken into account
- Liability for lifts for ground floor tenants
- Building layout and proportioned sq ft demised responsibilities
- Poor and or unessential maintenance
- Electrical / Gas / Water upgrade works
- Sinking or depreciation fund (can be time limited)
- Benefits to some tenants and not to others
- Air conditioning installation or upgrading
- Plant or heating upgrading
Areas where SMART audit to potentially recover or reduce costings:
- Extensive works to the building may constitute ‘improvements’ and are not generally recoverable from tenants who are only liable for ‘repairs’
- Incorrect allocation of costs among tenants
- Items that are being reclaimed from the tenant that are not recoverable under the terms of the lease
- Limitation of recovery of fees and costs within the lease
- Service charge caps in leases not correctly calculated or used
