Service charge

COMMENT | Beware of the great service charge scam

More and more landlords are pushing commercial tenants to pay higher service fees than they should, writes Anna Main of Landwood Group.

Inflated service fees are a growing problem and come as the economic downturn begins to hit businesses in the region hard. At Landwood Group, we are seeing an increase in the number of companies coming to us for advice on how to combat these unfair charges.

The problem arises when landlords and agents overcharge tenants for services that, in many cases, they simply don’t get and are not responsible for.

This is a tricky and complex area, as few tenants have the time, expertise or knowledge to effectively challenge landlords.

We found countless examples of landlords abusing tenants’ trust by charging tenants fees such as unnecessary insurance, utility costs, facility maintenance, and front desk staff.

We’ve even seen landlords charging tenants for teas and coffees.

Ultimately, you should only be charged for services that you directly benefit from as a business. If not, you are entitled to compensation.

So how do you know if you are paying too much? We recommend undertaking a comprehensive rental charge audit to determine if landlords’ monetary requirements fall within the contractual obligations of the tenant’s lease.

If errors are detected, you can negotiate reductions, refunds or credits of any inappropriate or unreasonable cost.

Due to the pervasiveness of these inflated service fees, we have launched a service fee advisory service to help achieve this. Our dedicated team undertakes forensic investigations to maximize savings and mitigate occupant expenses on a single property or across an entire portfolio.

Challenging unfair service charges can save businesses thousands of pounds. For example, one of our clients saved £40,000 by halving a utility bill after finding he was being charged for electricity and air conditioning which he did not have in his suite which would have must have been owner’s fee.

In today’s economic climate, it’s vital for businesses to maximize the value of every spend.

So whether you’re working from a glittering downtown tower, a sprawling warehouse, or somewhere in between, look at your service charges.

  • Anna Main is Director of Commercial Asset Management at Landwood Group