If you rent commercial space in the UK, the service charge is often the part of the bill that causes the most confusion. Recent research from the government’s 2025 consultation identified four main problems the new rules aim to fix: a lack of standardised, readable demand formats; inconsistent or delayed annual accounts; limited access to supporting documents and invoices; and high costs when disputes reached tribunal or court. That means if you’re a tenant, you’ve probably been paying for things you’re not sure about, and you’ve had a hard time getting straight answers. I’ve been covering commercial property for years, and this is the single most common frustration I hear from business owners — they sign a lease, pay the rent, and then get hit with a service charge bill they can’t verify.
The good news is that things are changing. The updated RICS Professional Standard, Service charges in commercial property (2nd edition), took effect from 31 December 2025, and it’s compulsory for all RICS-accredited professionals. This new Code aims to improve overall standards and promote greater transparency, fairness, and consistency in the management and administration of service charges across commercial properties. If you’re a tenant, this is your chance to get a fairer deal — but only if you know what to look for. Here’s what you actually need to know.
Before we dive in, if you’re still figuring out whether commercial renting is right for your business, you might find it useful to read about the rise of serviced offices — a different model that avoids many of these service charge headaches entirely.
What a service charge actually covers — and what it doesn’t
Most people assume a service charge is just for cleaning the stairs and keeping the lights on in the hallway. It’s much more than that. In commercial properties, tenants pay service charges under the terms of their lease, and these costs typically cover building insurance, cleaning of communal areas, lift maintenance, gardening, roof repairs, and the management fees charged by the managing agent. That’s a lot of line items, and each one can be disputed if it’s not handled properly.
The key thing to understand is that the Code does not override lease terms and is not legally binding, but it sets industry benchmarks and is a vital reference point for negotiations and dispute resolution. So even if your landlord isn’t RICS-regulated, the Code offers a balanced position on service charge management and administration. What I’d do in your shoes is read your lease carefully and compare it against the Code’s recommendations. If there’s a gap, you have a strong argument to raise it.
If you’re thinking about downsizing your space, it’s worth understanding how service charges scale. A smaller unit doesn’t always mean a smaller charge — shared costs are often apportioned by floor area. That’s something to consider when deciding if a smaller commercial space is right for your UK business.
Why the new rules matter for your bottom line
The RICS updates to its commercial service charge standards were driven by a need for clearer timelines, better fund management, and consistency across the sector. For you as a tenant, this means less guesswork and more accountability. Under the new rules, landlords must provide access to contracts with suppliers and contractors, invoices and receipts for work carried out, insurance policies and any related commission details, fire risk assessments, and historic records going back up to six years. Only genuinely commercially sensitive information can be withheld.
Let me give you a scenario. Imagine you’re running a small retail unit in a shared building. Your landlord sends you a service charge bill for £12,000 this year — up from £8,000 last year. Under the old system, you’d have little recourse. Under the new rules, you can demand to see every invoice, every contract, and every insurance policy that contributed to that figure. If the landlord can’t produce them, or if the costs were incurred more than 18 months ago without proper notice, you may not have to pay.
There’s also a demographic angle worth noting. The updated Code is compulsory for all RICS-accredited professionals, but not all landlords are RICS-regulated. If your landlord is a smaller private operator, they may not be bound by the Code. That doesn’t mean you’re powerless — the Code still serves as a benchmark in any dispute. What I’ve noticed over the years is that tenants who know their rights under the Code tend to get better outcomes, even against unregulated landlords.
If you’re looking at expanding into a new area, you might want to check out the UK’s most underrated cities for commercial space opportunities — some of these markets have landlords who are more transparent about service charges from the start.
Where tenants get caught out
I’ve seen the same mistakes crop up again and again. Here are the most common ones, and how to avoid them.
Not checking the prescribed format of the demand
Under LAFRA 2024, landlords must issue service charge demands in a prescribed format. The demand must clearly set out the names and addresses of both the landlord and the leaseholder, the total amount demanded based on the annual service charge budget, the period the demand covers, payment deadlines and consequences for non-payment, and a summary of the leaseholder’s rights. If a landlord issues a demand that does not follow the prescribed format, that demand may be unenforceable. The budget must accompany the demand at the start of the service charge year. What this means for you: if your demand doesn’t include all of these elements, you may have grounds to challenge it. Don’t just pay it — check it first.
Ignoring the annual reporting requirement
For residential buildings containing four or more dwellings, the landlord must provide a written statement of accounts within six months of the end of each service charge accounting year. This statement must include an income and expenditure account, a balance sheet, details of the reserve fund balance, and a summary of any major works carried out. For buildings with four or more properties, a qualified accountant must certify these accounts. If your landlord is late or doesn’t provide this, it’s a red flag. I’d recommend keeping a calendar reminder for when the accounts are due — and following up immediately if they don’t arrive.
Overlooking insurance commission disclosure
Under LAFRA 2024, landlords must disclose any commission or payment they receive in connection with building insurance policies. If they fail to disclose this, they cannot recover the insurance premium through the service charge. This is a big one. Landlords have historically made significant sums from hidden insurance commissions. Now, if they don’t tell you about it, they can’t charge you for the insurance at all. Administration charges, such as fees for providing information or granting consents, must also be reasonable and follow any prescribed limits set by secondary legislation.
Here’s a quick comparison of what’s changed under the new rules:
→ Scroll right to see all columns
| Requirement | Old rules | New rules (LAFRA 2024 / RICS Code) |
|---|---|---|
| Demand format | No standard format | Prescribed format required; unenforceable if missing |
| Annual accounts deadline | No fixed deadline | Within 6 months of year-end |
| Cost recovery time limit | 18 months (loosely enforced) | 18 months with strict notice requirement |
| Insurance commission disclosure | Not required | Mandatory; non-disclosure blocks recovery |
| Tenant access to documents | Limited | Up to 6 years of records, with limited exceptions |
If you’re already in a lease and worried about what you’ve been paying, it’s worth looking into tips for lease surrender — sometimes the cleanest solution is to exit and renegotiate under the new rules.
How to protect yourself — a practical guide
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Audit your current service charge demands
Start by gathering every service charge demand you’ve received in the last 18 months. Check each one against the prescribed format requirements under LAFRA 2024. Does it include the landlord’s name and address? Your name and address? The total amount demanded? The period it covers? Payment deadlines? A summary of your rights? If any of these are missing, the demand may be unenforceable. Write to your landlord pointing out the omission and ask for a compliant demand. If they refuse, you may have grounds to withhold payment — but get legal advice first. A tenant landlord lawyer can review your specific situation and tell you exactly what to do next.
Request your annual accounts on time
Your landlord must provide a written statement of accounts within six months of the end of each service charge accounting year. If you’re in a building with four or more properties, a qualified accountant must certify these accounts. Mark the date on your calendar. If the accounts don’t arrive, send a formal written request. If they still don’t arrive, you can escalate to a tribunal. The key here is to act quickly — don’t let months slip by. The sooner you flag a missing statement, the sooner you can resolve it.
Demand access to supporting documents
Under the new rules, you have the right to see contracts with suppliers and contractors, invoices and receipts for work carried out, insurance policies and any related commission details, fire risk assessments, and historic records going back up to six years. Only genuinely commercially sensitive information can be withheld. Write to your landlord and request these documents in writing. If they refuse without a valid reason, that’s a breach of the Code and potentially of the law. A property lawyer can help you draft the request and handle any pushback.
Watch for the upcoming ban on upward-only rent reviews
The government’s English Devolution and Community Empowerment Bill, published on 10 July 2025, included proposals prohibiting upwards-only rent reviews in new and renewal commercial leases, rendering such provisions unenforceable if enacted. An upwards-only rent review keeps the reviewed rent to the higher of the current passing rent and the open market rent or index linked uplifted rent, such that rent may remain static or increase but cannot decrease. Some such clauses also incorporate a percentage “collar” to artificially inflate the rate of increase if RPI/CPI has remained static or low. As currently drafted, the prohibition applies to all commercial leases, with limited exemptions for agricultural holdings, tenancies of six months or less, and farm business tenancies. The Bill continues to progress at pace through Parliament and is now at the committee stage in the House of Lords. While 2026 may be the defining year for its passage, it could become law late 2026/2027, though it is not known if the proposals will come into force immediately. If you’re negotiating a new lease right now, try to avoid an upwards-only rent review clause — or at least get a cap on how much it can increase each year.
If you’re thinking about adapting your lease to these changes, you might find adaptive leasing strategies useful — they cover how to build flexibility into your commercial lease.
Frequently asked questions
Can I refuse to pay a service charge if the demand doesn’t follow the new format? ▾
What happens if my landlord isn’t RICS-regulated? ▾
How far back can I request documents? ▾
Does the 18-month rule apply to all costs? ▾
What if my landlord tries to charge tribunal costs through the service charge? ▾
Will the ban on upward-only rent reviews affect my existing lease? ▾
Your next move
The new rules give you more power than ever to challenge unfair service charges. Start with a simple audit of your most recent demand — check the format, check the timing, and check what documents you’re entitled to see. If something doesn’t add up, don’t ignore it. The 18-month rule and the prescribed format requirements are your strongest tools. Use them.
If this was useful, you might also want to read decoding UK commercial rent — are you paying too much?
Sources and Further Reading
Essential tips for UK suburban commercial leasing — Practical advice for tenants in suburban markets where service charge disputes are common.
How to navigate business rates when renting in the UK — Another major cost for commercial tenants, with its own set of rules and reliefs.
UK real estate sector 2026 and beyond. Charles Russell Speechlys, 2026.
New rules for service charge accounting. Cox Hinkins, 2025.
Service charges in commercial property, 2nd edition. RICS, 2025.
