If you’re renting commercial space in the UK, the rent is only part of the story. A recent industry survey found that service charges can add 30% or more to your total occupancy costs, yet many tenants sign leases without fully understanding what they’re agreeing to pay for. That gap in understanding is exactly where disputes start.
I’ve been writing about UK property and business costs for years, and the question I hear most often from tenants isn’t about rent — it’s about service charges. What am I actually paying for? Can the landlord charge me for that empty unit next door? And why does the final bill always seem higher than the budget I was shown? These aren’t small concerns. With the new RICS Service Charges in Commercial Property standard taking effect from 31 December 2025, the rules have shifted significantly. If you’re negotiating a lease or already in one, this matters right now.
Here’s what you actually need to know. The new RICS standard is the biggest shake-up in service charge governance in nearly a decade. It’s compulsory for all RICS-accredited professionals, and while it doesn’t override your lease, it sets the benchmark for what’s considered reasonable. If your landlord or their managing agent is RICS-regulated, they must comply — or have a very good reason not to. That gives you real leverage, whether you’re negotiating a new commercial lease or challenging an existing charge.
What a service charge actually covers — and what it doesn’t
The most important thing to understand is that a service charge isn’t a slush fund. It’s meant to cover the actual costs of running and maintaining the shared parts of a building — things like cleaning common areas, lighting car parks, maintaining lifts, and insuring the structure. But the line between what’s a legitimate service charge cost and what’s the landlord’s own investment expense has always been blurry. The new RICS standard draws that line much more clearly.
What I tend to notice when I look at disputed service charges is that the biggest arguments aren’t about the small stuff — they’re about the big structural costs that landlords try to pass on. The new standard explicitly bans recovery of landlord investment costs, including asset management, rent collection, and anything related to enhancing the landlord’s reversionary interest. It also blocks void property costs — the rates, insurance, and services for empty units. If you’re in a multi-let building and half the units are vacant, you shouldn’t be subsidising the landlord’s empty space.
Why the new RICS standard changes the game for tenants
The updated standard isn’t just a paperwork exercise. It fundamentally reshapes the balance of power in service charge negotiations. For the first time, there’s a clear, enforceable benchmark for what’s reasonable — and tenants can use it. A survey of the UK real estate sector noted that the standard aims to reduce disputes and enhance transparency and trust. That’s not just aspirational — it’s practical. If your landlord’s service charge budget arrives late, or if the year-end reconciliation is months overdue, you now have a clear industry standard to point to.
Consider this scenario: you’re a small business renting 1,000 square feet in a shared office building. Your landlord sends a service charge budget showing a 15% increase, citing rising insurance costs. Under the new standard, the landlord must disclose any commission they receive from the insurance provider. If they’re pocketing a rebate while charging you full price, that’s now a breach of best practice. You can challenge it.
There’s also a regional dimension worth noting. Service charges tend to be higher in London and the South East, where buildings are larger and more complex, but the disputes are more common in regional centres where tenants have less bargaining power. If you’re in a smaller city with fewer available properties, you might feel you can’t push back. The new standard gives you a professional reference point that doesn’t depend on your negotiating strength.
Where tenants and landlords get tripped up
Most service charge disputes come down to a handful of recurring mistakes. Here’s what I see most often, and how the new standard addresses each one.
Accepting a percentage-based management fee
Under the old rules, it was common for landlords to charge a management fee of 10% or 15% of the total service charge. That created a perverse incentive: the higher the service charge, the more the landlord earned. The new standard bans this outright. Management fees must now be fixed at the start of the service charge year. If your lease still references a percentage fee, you can use the standard to negotiate a fixed amount during your next rent review or lease renewal.
Not checking the apportionment matrix
How is the total service charge split between tenants? Many leases use a simple percentage based on floor area, but that doesn’t always reflect actual usage. A ground-floor retail unit might use far fewer lifts than an office on the fifth floor, yet pay the same proportion. The new standard requires landlords to include an apportionment matrix in both the budget and the year-end reconciliation. That means you can see exactly how costs are weighted between occupiers. If the split looks unfair, you can challenge it.
Letting year-end reconciliations slide
It’s not unusual for landlords to take six, nine, or even twelve months to produce year-end service charge accounts. By that point, the numbers are stale, and tenants have often lost the paperwork to challenge them. The new standard tightens this to four months maximum. If your landlord misses that deadline, they must provide an explanation. More importantly, you now have a clear timeframe to expect — and demand — your reconciliation.
| Requirement | Old Practice | New Standard |
|---|---|---|
| Budget delivery | Often late or not provided | At least 1 month before service charge year starts |
| Year-end reconciliation | 6–12 months common | Within 4 months of year-end |
| Management fee | Often a percentage of total charge | Fixed amount set at start of year |
| Apportionment matrix | Rarely provided | Must be included in budget and reconciliation |
| Commission disclosure | Often hidden | Must be declared in service charge accounts |
Paying for costs that aren’t recoverable
This is the big one. The new standard explicitly lists costs that must not be recovered through the service charge: landlord investment costs, void property costs, initial capital costs, future redevelopment costs, and negligence-related costs. If your landlord is charging you for marketing empty units, or for feasibility studies on a planned refurbishment, that’s now clearly outside best practice. You can refuse to pay, and if it goes to dispute, the RICS standard will be a key reference point.
What I’d do if I were in your shoes: the next time your service charge budget or reconciliation arrives, go through it line by line against this list. Any cost that looks like it belongs in one of those banned categories, flag it in writing to your landlord. You don’t need to be aggressive — just ask for clarification under the new RICS standard. Most landlords will back down rather than defend an indefensible charge.
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How to protect yourself: a practical guide for tenants
The new RICS standard gives you tools, but you still need to use them. Here’s a step-by-step approach to managing your service charge, whether you’re negotiating a new lease or dealing with an existing one.
Review your lease for service charge provisions
Your lease is the starting point. It defines what costs can be recovered, how they’re apportioned, and what dispute resolution process applies. The new standard doesn’t override your lease, but it sets the benchmark for what’s reasonable. If your lease is vague — for example, it says “service charge shall include all costs incurred by the landlord in maintaining the building” — the standard can help you argue that certain costs (like void property costs) are unreasonable even if the lease doesn’t explicitly exclude them. If you’re unsure about your lease terms, it’s worth getting a tenant landlord lawyer to review the service charge clause specifically.
Demand timely budgets and reconciliations
Under the new standard, you’re entitled to a budget at least one month before the service charge year starts, and a reconciliation within four months of the year-end. If your landlord doesn’t provide these on time, send a polite but firm written request referencing the RICS standard. Keep a record of all correspondence. If the delay continues, you may have grounds to withhold payment of the disputed portion — but get legal advice before doing so, as lease terms vary.
- 1Check your lease for the service charge clauseIdentify what costs are recoverable, how they’re apportioned, and what dispute process applies. The lease is the legal document — the RICS standard is the benchmark for reasonableness.
- 2Request the budget and apportionment matrixAsk for the budget at least one month before the service charge year starts. The apportionment matrix must show how costs are split between occupiers.
- 3Scrutinise the year-end reconciliationWithin four months of year-end, you should receive a full reconciliation. Check every line against the banned costs list: investment costs, void costs, capital costs, redevelopment costs, and negligence costs.
- 4Challenge any non-compliant charges in writingFlag any costs that appear to breach the RICS standard. Reference the standard by name. If the dispute isn’t resolved, consider Alternative Dispute Resolution (ADR) before court action.
Understand the emerging ban on upward-only rent reviews
This is a separate but related development that could significantly affect your total property costs. The government’s English Devolution and Community Empowerment Bill, published in July 2025, includes a proposal to prohibit upward-only rent reviews in new and renewal commercial leases. If enacted, this would mean your rent could go down as well as up at review — a major shift from the current norm. The Bill is progressing through Parliament and could become law in late 2026 or 2027. If you’re negotiating a new lease now, consider whether you want to include a clause that anticipates this change, or at least avoid locking yourself into an upward-only review for the full term.
Use the standard in heads of terms negotiations
When you’re negotiating heads of terms for a new lease, the service charge should be a key point of discussion. Ask the landlord to confirm in writing that they will comply with the RICS Service Charges in Commercial Property standard. Request a sample budget and apportionment matrix before you sign. If the landlord is unwilling to commit to the standard, that’s a red flag. You can also ask about the management fee — it should be a fixed amount, not a percentage. Getting these details right at the heads of terms stage is much easier than trying to fix them after the lease is signed. For more on this, read our guide on unmasking the hidden costs of UK commercial leases.
Frequently asked questions about commercial service charges
Can my landlord charge me for empty units in the building? ▾
What happens if my landlord doesn’t provide a service charge budget on time? ▾
Is the RICS service charge standard legally binding? ▾
Can I dispute a service charge that includes landlord investment costs? ▾
What should I do if I think my service charge is too high? ▾
Does the new standard affect leases signed before December 2025? ▾
The new RICS service charge standard is a genuine step forward for transparency and fairness in commercial property. It gives tenants clearer rights, tighter timelines, and a stronger position to challenge unreasonable costs. My advice is simple: use it. Read your service charge budget and reconciliation line by line. Compare each cost against the banned list. If something doesn’t look right, ask questions in writing. Most landlords will prefer to correct an error than defend it in a dispute.
If this was useful, you might also want to read The Landlord-Tenant Relationship: Building Bridges, Not Burning Them.
Sources and Further Reading
Decoding UK Commercial Rent: Are You Paying Too Much? — A deeper look at how rent compares to service charges and what you can negotiate.
The new RICS Service Charge Standard: what it is and changes for 2026. Stevens & Bolton LLP, 2026.
UK Real Estate Sector 2026 and Beyond. Charles Russell Speechlys, 2026.
Understanding Service Charges in Commercial Property Leases: A Guide for Businesses. Sprintlaw, 2025.
