Office Service charge Query

clockworks_2

Hi

I rent an Office from the City of London, Have been here for 3 years and my Tenancy expires in 2 years.

We have received a demand for 25% of a £120k charge for replacing the lift.

On our lease it says we are responsible for 25% of

"the running expenses maintenance repair and insurance of the lift"

Does replacing the lift come under this?

cattie

Yes it does, as replacement of an item too costly or not practical to repair comes under the umbrella of maintenance.

DVardysShadow

cattie wrote: »

Yes it does, as replacement of an item too costly or not practical to repair comes under the umbrella of maintenance.

I am not sure I would agree. What has happened is renewal - and we don't know for a fact one way or the other whether the lift was too costly to repair.

As the lease clause is worded, it seems to me that what should be charged for is the the on going wear and tear - not renewal. It seems grossly unjust to me that OP is being stung for the whole cost of a lift which could be expected to last for 30 or 40 years, with a tenancy which lasts for 5 years.

propertyman

You need to look at the landlord's repairing covenant and the full service charge contribution clause in the lease as this simple clause is not the full picture.

On the basis of this sentence alone you are going to be responsible for the repair but not the cost of improvement or betterment of the new installation, if the cost of repair is less than a new one.

But as with all leases its a puzzle and the answer is in several places.

If the lease is that woolly then refer to the books of case law on this and arbitrate.

clockworks_2

The chap who looks after us for the City of London Corp said the lift is over 40 years old so we need a new one. Said parts are hard to find etc.
We're a small business and cannot afford £30k .

Very worried about what to do.

JQ.

The correct answer is that the Landlord should have been running a Sinking Fund for replacement of expensive equipment such as this. I assume they have not as they're trying to recover the whole cost.

You need to speak to a Landlord and Tenant Surveyor (RICS) who is expert in appealing Service Charge Budgets. Speak to the other tenants in the building and instruct one together, no doubt they are as worried as you are, plus if you all act together with one Surveyor acting on all your behalves it puts all of you in a much stronger position, plus you can split the bill. This is not something you will be able to sort out yourself, so you do need expert advice. Unfortunately it's not my area of expertise so i can't give you much better advice.

If any of the other tenants are national companies they may already have retained Surveyors, so speak to them. If not walk round your locality and ring the numbers on the "to let" boards and ask if they have an L&T dept, and question them about their expertise and experience of appealing Service Charge Budgets for tenants and explain the issues and they should be able to take it from there.

propertyman

JQ. wrote: »

The correct answer is that the Landlord should have been running a Sinking Fund for

Which is the wrong answer..........

The landlord is only liable for the obligations in the lease, no sinking fund clause, no sinking fund.

With lets in the region of 5 years it is going to be deterrent to letting for many markets.

Similarly this was a commercial decisions on which the OP took I expect advice, not only on the lease but the property and the obligation they are taking on.


There is no "Appeal" in Service charge budget in Commercial. There is an RICS code, but where you start is reading the whole lease, not one line.

As for expert advice see #4 It is frankly sense, read the whole contract first.

clockworks_2

Thanks for all your posts so far. Is there anyone you can recommend to get in touch with?

JQ.

propertyman wrote: »

Which is the wrong answer..........

The landlord is only liable for the obligations in the lease, no sinking fund clause, no sinking fund.

With lets in the region of 5 years it is going to be deterrent to letting for many markets.

Similarly this was a commercial decisions on which the OP took I expect advice, not only on the lease but the property and the obligation they are taking on.


There is no "Appeal" in Service charge budget in Commercial. There is an RICS code, but where you start is reading the whole lease, not one line.

As for expert advice see #4 It is frankly sense, read the whole contract first.

So you agree with me, and therefore my advice was correct - no siking fund provision for replcement no liability for replacement.

There are plenty of 5 year leases in place with sinking fund provisions in place without them becoming unmarketable.

Of course you can appeal the Service Charge - that's the whole point of providing audited accounts to tenants - to enable them to assess them and then object if they feel they are not correct. There's an entire industry of people (solicitors & surveyors) who's job is to act for occupiers in this respect.

It's all well and good telling someone to read the lease and all become clear, but the reality is that commercial leases are invariably badly worded with terms not always recogniseable to a non-property person. Similarly, omisions from leases (which it's unlikely the OP will realise) can also have a significant impact. So, my advice still stands, get someone who knows what they are doing to read the lease and let them advise on what action to take.

clockworks_2

The Tennant on the fourth floor who moved in 4 months ago, doesn't have to pay anything as his service charge was capped. How is this even fair?

zappahey

Unfortunately, fairness doesn't come in to it. The other tenant may simply have negotiated a better deal than you did.