What additional costs will landlords be able to recover via the service charge?

Jun 1, 2020

As offices begin to reopen, landlords will naturally be considering what their new obligations to their tenants will be and how the costs of any additional services will be met:

Social distancing of common parts 

Social distancing will need to be managed in the communal spaces of buildings such as the reception, toilets, showers and the lift. There is also likely to be an increased demand for other facilities such as bike racks, communal showers and changing rooms, which will all need to be managed with social distancing and enhanced cleaning in mind.

If a building has shared break areas then the use of these will need to be carefully considered and the use of and access to such areas may either need to be limited or restricted altogether.

Building Systems

Buildings may have had some of their systems switched off, or working at a minimal level, since the formal lockdown began in March.  As we return to working from offices, the inspection, cleaning and servicing of such equipment is likely to be required before they can be restarted.

Increased cleaning

Landlords will be providing more frequent and thorough cleansing of common parts for the benefit of their tenants.  This could include having sufficient supplies of hand sanitiser and washing facilities in the common areas together with more regular deep cleaning of the building.

Who pays?

Supplying these extra cleaning services will mean increased costs on the Landlord, and we would recommend that commercial landlords check the service-charge provisions in their leases to ensure such charges are recoverable.

It is often the case that service-charge provisions within a lease will contain a general catch all provision allowing the landlord to recover reasonable costs incurred in line with the principles of good estate management. Some service-charge provisions will also allow costs incurred as a result of complying with “applicable laws” to be recovered.  Whether a landlord can rely on this latter example will depend on whether the government imposes prescriptive measures.

Landlords should also consider whether the costs of such additional cleaning may be caught by any particular exclusion in the service charge agreed with tenants and also whether or not tenants benefit from a service charge cap which may restrict the amount recoverable in any event.

The exact position for the landlord will be governed by the wording of the lease and the particular additional services being offered.  If you have any questions or would like us to offer advice on your particular circumstance please get in touch with the Real Estate Team you can email realestate@herrington-carmichael.com, call 01276 686222 or visit https://www.herrington-carmichael.com/.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.

 

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