The second edition of the Service Charge Code of Practice in Commercial Property has been launched by RICS and will become effective on 1 October 2011.
The Code of Practice is a guidance note for commercial property managers, owners and occupiers and is intended to promote best practice, uniformity, fairness and transparency in the management and administration of service charges in commercial property - an issue which often causes unnecessary conflict between owner and occupier if not managed effectively.
Building on the standards announced in the initial code, the updated code now requires that management fees are set on a fixed price basis rather than being calculated as a percentage of expenditure - which is considered as a disincentive to deliver value for money.
The issues around sustainability are addressed for the first time and two model lease clauses are available to ensure standards are being met in new and renewal leases. Compliance with the code also requires the adoption of the Industry Standard Cost Classifications.
Communication, transparency and timeliness remain key issues in the 2011 Code of Practice.
For further information, contact Mel Wheatley.
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