If you rent commercial space in the UK, the service charge invoice is probably the part of your lease you understand the least. A 2025 government consultation found that a lack of standardised, readable demand formats was one of the four main problems driving the biggest overhaul of service charge regulation in decades. That means if your landlord sends you a confusing bill, you are not alone — and the rules are finally changing to fix it.
I have been writing about commercial property for years, and the question I hear most often from tenants is simple: “How do I know if I am being charged fairly?” The answer used to be complicated because the rules were vague. That is no longer the case. The new RICS Service Charge Standard, effective from 31 December 2025, and the Leasehold and Freehold Reform Act 2024 (LAFRA 2024) have introduced mandatory formats, strict deadlines, and clearer tenant rights. If you are renting commercial space, you now have more power to challenge a bill than ever before. Here is what you actually need to know.
What a Service Charge Invoice Actually Covers
Most tenants assume the service charge covers everything the landlord does to keep the building running. That is not quite right. The charge is meant to cover the cost of maintaining and managing shared areas — things like cleaning communal lobbies, lift maintenance, gardening, roof repairs, and building insurance. But the new rules draw a much clearer line around what cannot be included.
Under the updated RICS standard, landlords cannot recover investment costs like asset management, rent collection, or costs related to enhancing their own reversionary interest. Void property costs — such as rates, insurance, and services for empty units — are also out. So are initial capital costs like original fit-out or installation of new plant equipment, unless expressly justified and agreed in the lease. If I were reviewing a service charge invoice, the first thing I would check is whether any of these non-recoverable costs have been slipped in. A good place to start is understanding how your service charge is structured in your lease.
Why the New Rules Matter for Your Bottom Line
The changes are not just administrative. They have a direct impact on how much you pay and when. Under the new RICS standard, landlords must issue service charge budgets at least one month before the start of the service charge year. Year-end accounts and reconciliations must follow within four months of the year ending. If your landlord is late, they must provide an explanation. That is a big shift from the old system, where delays were common and tenants had little recourse.
Consider this scenario: your landlord sends a reconciliation statement nine months after the year ends, claiming you owe an extra £3,000 for unexpected roof repairs. Under the old rules, you might have had to pay and then dispute it. Under the new rules, the landlord has already missed the four-month deadline. You can push back. The 18-month rule under the Landlord and Tenant Act 1985 also remains in force — landlords cannot recover costs incurred more than 18 months before the demand is issued, unless they served a prescribed notice within that window. That means old bills can become unenforceable if the landlord drags their feet.
What I tend to notice is that tenants rarely check the timing of a charge. They see a bill and pay it. But the new rules give you a clear deadline to hold your landlord to. If you are unsure whether a charge is valid, speaking with a tenant landlord lawyer can clarify your position before you pay anything.
Where Tenants Get Tripped Up
Even with better rules, mistakes happen. Here are the most common ones I see, and how to avoid them.
Paying Without Checking the Format
Under LAFRA 2024, service charge demands must follow a prescribed format. The demand must clearly show the names and addresses of both landlord and tenant, the total amount based on the annual budget, the period it covers, payment deadlines, and a summary of your rights. If any of that is missing, the demand may be unenforceable. Do not assume a confusing invoice is your problem to solve. If the format is wrong, the landlord has to fix it.
Ignoring the Budget Before the Year Starts
The budget must accompany the demand at the start of the service charge year. Many tenants file it away without reading it. That is a mistake. The budget sets the ceiling for what you can be charged. If the landlord later tries to claim costs that were not in the budget, you have grounds to challenge them. I always recommend reviewing the budget line by line and comparing it to the previous year. A sudden jump in management fees, for example, should raise a red flag — especially since management fees can no longer be a percentage of the total charge under the new RICS standard.
Not Asking for Supporting Documents
You have the right to request invoices, receipts, contracts with suppliers, insurance policies, and fire risk assessments going back up to six years. Only genuinely commercially sensitive information can be withheld. If your landlord refuses to show you an invoice for a £10,000 repair, that is a problem. Without seeing the invoice, you cannot verify the cost was reasonable. A property lawyer can help you draft a formal request if your landlord is uncooperative.
→ Scroll right to see all columns
| Cost Type | Recoverable? | Notes |
|---|---|---|
| Cleaning communal areas | Yes | Standard operating cost |
| Lift maintenance | Yes | Routine repair and servicing |
| Landlord investment costs | No | Asset management, rent collection |
| Void property costs | No | Rates, insurance for empty units |
| Initial capital costs | No | Original fit-out, new plant equipment |
| Negligence-related costs | No | Avoidable overspending or poor maintenance |
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 it, they cannot recover the insurance premium through the service charge. This is a relatively new requirement, and many landlords are not yet compliant. If your service charge includes a large insurance line, ask for a breakdown of any commission. If the landlord cannot provide it, that portion of the charge may be invalid.
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How to Review and Challenge a Service Charge Invoice
You do not need to be a property lawyer to spot problems. Here is a practical process you can follow with every invoice.
Check the Format and Timing
Start with the basics. Does the invoice include the landlord’s and your names and addresses? Does it state the total amount, the period it covers, and the payment deadline? If any of that is missing, the demand may be unenforceable under LAFRA 2024. Next, check the date. Was the budget issued at least one month before the service charge year started? If not, the landlord is already in breach of the RICS standard. For year-end reconciliations, the deadline is four months after the year ends. If your landlord missed it, ask for a written explanation. If they cannot provide one, you have grounds to dispute the reconciliation.
Compare Actual Costs to the Budget
Lay the budget and the actual invoice side by side. Look for costs that were not in the budget. If a new line item appears — say, “emergency roof repair” — ask for the invoice and a copy of the contractor’s quote. Under the new rules, you have the right to see supporting documents. If the cost seems high, check whether it falls into a non-recoverable category like negligence-related costs. Poor maintenance that led to an emergency repair is not your problem to pay for. If you are unsure, a business lawyer can review the lease and the invoice together.
Verify the Management Fee
Management fees must now be fixed at the start of the service charge year. They cannot be a percentage of the total budget or actual spend. If your invoice shows a management fee that fluctuates or is calculated as a percentage, that is a red flag. Ask the landlord for the fixed fee agreed at the start of the year. If they cannot produce it, the fee may be unreasonable. The RICS standard also requires that any commission, rebates, or other payments received by the landlord or manager be declared in the service charge accounts. If you see a management fee that seems high, dig into whether the landlord is double-dipping.
Look for Non-Recoverable Costs
Go through the invoice line by line and flag anything that looks like a landlord investment cost, void property cost, initial capital cost, or future redevelopment cost. These are explicitly non-recoverable under the new RICS standard. If you see a charge for “marketing empty units” or “feasibility study for new development,” push back. The landlord cannot pass those costs to you. If they insist, ask them to point to the specific clause in your lease that allows it. The lease is still the starting point, but the RICS standard is increasingly regarded as a benchmark for what is reasonable.
Dispute Through the Right Channel
If you find a problem, do not withhold payment without warning. That can lead to breach of lease. Instead, write to the landlord explaining which charges you are disputing and why. Reference the specific rule — for example, the 18-month rule under the Landlord and Tenant Act 1985, or the non-recoverable cost list in the RICS standard. The new rules encourage parties to use Alternative Dispute Resolution (ADR) before going to court. ADR is faster and cheaper than tribunal. If the landlord refuses to engage, you can take the dispute to a tribunal, but the new rules limit the landlord’s ability to recover tribunal costs through the service charge unless a tribunal specifically orders otherwise. That removes a major deterrent to challenging unfair bills.
For tenants who want to stay ahead of these changes, it is worth future-proofing your commercial lease to include clear service charge provisions that align with the new standards.
Frequently Asked Questions
Can my landlord charge me for improvements to the building? ▾
What happens if my landlord does not provide a budget before the year starts? ▾
Can I be charged for empty units in the building? ▾
How far back can I request service charge records? ▾
What should I do if I think a charge is unreasonable? ▾
The new rules give you more protection than ever, but they only work if you use them. Start by reviewing your most recent service charge invoice against the checklist above. If something does not add up, ask for the supporting documents. You have the right to see them. If this was useful, you might also want to read Essential Tips for Understanding Tenant Service Charge Reconciliation in the UK.
Sources and Further Reading
Top Tips for Understanding Service Charge Lift Maintenance in UK Rentals — A focused guide on one of the most common and costly service charge items.
London Commercial Property: Are You Making These Costly Leasing Mistakes? — Practical advice for tenants navigating the capital’s commercial market.
New Rules for Service Charge Accounting. Cox Hinkins, 2025.
The New RICS Service Charge Standard: What It Is and Changes for 2026. Stevens & Bolton LLP, 2025.
Service Charges in Commercial Property, 2nd Edition. RICS, effective 31 December 2025.
