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Property Management
Philip Angell MRICS Director
• Purpose• Check Lease • Budgets & Reconciliation• Extent of Services• Mandatory / Discretionary• Method of Apportionment• Sweeper Clauses• Improvements
Service Charge Overview
Service Charge Overview
• Trend in Service Charges - UP !• Compliance with legislation, codes of practice,
health & safety, threat of litigation………….• Service charge caps – balance• Include utilities?• Comparing service charges
• 3rd Edition
• Status - Guidance Note
• Lease takes precedence
• Proportionality
RICS Service Charge Code
RICS Service Charge Code
• Core principles:• Service Costs
– Competitive quotations/benchmarking– Owners should not profit from the service charge
• Allocation & Apportionments– Costs allocated to appropriate schedule & cost category– Apportionment must be fair, reasonable & transparent
• Certification– True and accurate record of expenditure– In accordance with lease
RICS Service Charge Code
• Communication & consultation• Duty of Care• Financial competence
– Spending occupiers money– Act with high degree of competence, integrity,
professionalism, diligence, objectivity & transparency– Separate client account– Recommended Industry Standard Cost Headings
• 7 cost classes, 22 cost categories, cost descriptions• Occupier responsibilities
• ADR in new leases• Timeliness
– Communication– Budgets – 1 month– Accounts – 4 months
• Transparency• Value for Money
– Service quality appropriate to use location & character
RICS Service Charge Code
• Residential Legislation• S20 Consultation• LVT Challenge• Right to Manage• Notices:-
Rent - s166 Service Charge – s153
• RICS Guidance Note
Beware!
Mixed Use Schemes
Other Service Charge matters
• VAT – opt to tax?
• EPC – not a service charge item
• 2018 – EPC rating E or above
Heat Network (Metering and Billing) Regulations 2014
• Residential and commercial • Applies if you supply and charge for heat to more
than one final customer through a district heat network or communal heating system
• Aim –reduce energy consumption by raising end users awareness of usage
• Heat includes cooling and hot water• Should have notified NMRO by December 2015• Install meters by 31 December 2016?• www.gov.uk/heat-networks
Dilapidations –A Method of Protecting Your AssetsJohn Day MRICS – Director in Charge of Building Surveying
Lease – The weapon of Choice
The lease will contain covenants in respect of:• Repair• Decoration• Alterations• Statutory Regulation• Fees.
What Are Dilapidations
• During the lease period – a list of works required to put the landlord in a position he would be if the tenant had complied with the lease covenants
• At the end of the lease period – a claim for compensation
• Interim Schedule
• Terminal Schedule
Interim Schedules
• Myths and Truths
• Is it worth serving an interim schedule?
• YES but you need nerves and money
Interim Schedule
• Small Defect
Interim Schedule
• Large cost of resulting repair
Jervis V Harris
• This case established:
• The landlord can enter the property and carry out repairs if the tenant fails to do so
• The cost of works can be reclaimed as a debt –the landlord does not have to show a loss
Jervis V Harris
• Advantages:• It gets the works done• The cost can be recovered as a debt
• Disadvantages:• The landlord must finance the works• The tenant will be disrupted (and upset)• Loss of quiet enjoyment
Terminal Schedule
• Prepare and serve un-costed schedule
• Agree scope of works• Tender the works• Complete the works
OR pursue a settlement based on tendered works
Schedule Process
Terminal Schedule
• Advantages:• An agreed schedule of works if it progresses to
legal• An accurate cost of the works• Recovery of the cost as a debt• The ability to identify previously hidden defects
during the works
Defending the Claim
Modern Techniques
Defending the Claim
• The cup of Coffee Method
• Completing the Works
• Section 18 (1) Valuation
VAT and Other Matters
• VAT – does this affect the claim?
• Recovery of Fees – Can the landlord reclaim negotiation fees?
• Loss of Rent – Can the landlord claim for loss of rent?
• Supersession – Does it exclude works from a claim?