Over the years, I’ve watched far too many small business owners sign a commercial lease without a second glance at the service charge clause, only to be hit with a bill that makes no sense. It’s a pattern that comes up repeatedly in the work I do covering UK commercial property. The reality is that landlords must now issue service charge budgets at least one month before the service charge year starts, but many tenants still don’t know what they’re entitled to see. That gap in knowledge is exactly what leads to disputes and unexpected costs. Here’s what you actually need to know.
If you’re renting commercial space, the service charge is often the second biggest cost after rent itself. Yet it’s the part of the lease that gets the least scrutiny. The new rules for commercial service charges are designed to fix that, but only if you know what to look for. A good first step is to keep a physical file of all service charge demands and budgets — a simple accordion file folder can help you stay organised from day one.
What the new RICS standard actually means for your service charge
The most important thing to understand is that the RICS professional standard for service charges in commercial property, second edition, is now in effect from 31 December 2025. This isn’t a suggestion — it’s the benchmark that surveyors and property managers are expected to follow. The commercial rent traps that catch small businesses often stem from not knowing these rules exist.
What I’d do in your shoes is treat the service charge budget like a contract document. If it arrives late, or without the required apportionment matrix showing how costs are split between occupiers, flag it immediately. The standard is clear: any delay in issuing budgets or reconciliations must come with an explanation from the landlord. If you don’t get one, you have grounds to challenge the charge.
Why these changes matter for your bottom line
Here’s where the rubber meets the road. Under the new rules, landlords can no longer recover certain costs through the service charge at all. That list is longer than most tenants realise. Void property costs — including rates, insurance, and services for empty units — must now be covered by the landlord. So must initial capital costs like original fit-out or new plant equipment, unless there’s a specific agreement otherwise. Negligence-related costs, like poor maintenance that leads to bigger bills, are also off the table.
Consider a scenario where your landlord tries to charge you for marketing an empty unit next door. Under the old rules, that might have slipped through. Under the new standard, it’s explicitly banned. The same goes for landlord investment costs like rent collection or asset management — those are the landlord’s problem, not yours. I’ve seen tenants pay for these things for years without question, simply because they didn’t know they could push back.
What I’d notice from covering this space is that the businesses that get stung are usually the ones that don’t ask questions. If your service charge seems high, request access to the underlying invoices and contracts. Under the Leasehold and Freehold Reform Act 2024, landlords must provide access to supplier contracts, invoices, insurance policies, and fire risk assessments. That’s not a favour — it’s the law.
Where most commercial tenants get caught out
The most common mistakes I see aren’t about the big numbers — they’re about the details that slip through the cracks. Here are the four that cost tenants the most.
Not checking the prescribed format for service charge demands
Under LAFRA 2024, service charge demands must follow a prescribed format. If your landlord sends a demand that doesn’t clearly show both names and addresses, the total amount, the period it covers, payment deadlines, and a summary of your rights, that demand may be unenforceable. This is a powerful protection, but only if you know to look for it. If you receive a demand that looks incomplete, don’t pay it blindly — ask for a compliant version first.
Ignoring the 18-month rule on historic costs
Landlords cannot recover costs from you that were incurred more than 18 months before the demand is issued, unless they served a prescribed notice within that window. This is a common trap. A landlord might try to bundle up old repair bills from two years ago into a single demand. You’re not liable for those unless the proper notice was given. Check the dates on every cost in your reconciliation statement.
Accepting percentage-based management fees
This one is a big change. Under the new RICS standard, management fees can no longer be calculated as a percentage of the budgeted or actual service charge. They must be fixed at the start of the service charge year. If your lease still references a percentage fee, that clause may now be unenforceable under the professional standard. I’d recommend raising this with your landlord directly — many property managers simply haven’t updated their processes yet.
Failing to challenge insurance commission
Landlords must now disclose any commission or payment they receive in connection with building insurance policies. If they fail to do so, they cannot recover the insurance premium through the service charge. This is a significant lever for tenants. If your service charge includes building insurance and you’ve never seen the commission details, request them. A tenant landlord lawyer can help you draft that request if your landlord pushes back.
→ Scroll right to see all columns
| What landlords must disclose | What happens if they don’t | Your right |
|---|---|---|
| Insurance commission details | Premium becomes unrecoverable | Request access to insurance policies |
| Supplier contracts and invoices | Charge may be challenged | Access to records going back 6 years |
| Fire risk assessments | Breach of statutory duty | Request in writing at any time |
| Historic service charge records | Demand may be unenforceable | Up to 6 years of records |
How to protect yourself from unfair service charges
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Review your lease for prohibited cost categories
Start by reading your service charge clause alongside the list of costs the RICS standard says landlords cannot recover. These include void property costs, initial capital costs, future redevelopment costs, and negligence-related costs. If your lease says something different, the professional standard may override it — but you’ll need to check with a solicitor. A property lawyer can review your lease for a fixed fee and tell you which clauses are enforceable.
Demand proper accounts within the legal timeframe
Under the new rules, year-end accounts and reconciliations must be provided within four months of the end of the service charge year. For buildings with four or more properties, a qualified accountant must certify those accounts. If your accounts arrive late or uncertified, you have grounds to withhold payment until compliant accounts are provided. Keep a log of when you received each document — a tenant rights logbook can help you track deadlines and correspondence.
Use alternative dispute resolution before court
If a dispute arises, the RICS standard expects both parties to try Alternative Dispute Resolution (ADR) before going to court. This is cheaper and faster than litigation. You can find a qualified mediator through the RICS website or the Centre for Effective Dispute Resolution. The key is to act early — don’t let a small disagreement escalate into a legal bill that dwarfs the original dispute.
Prepare for the full transition by December 2026
The RICS expects all provisions to be fully in place and adopted for service charges with 31 December 2026 year ends and beyond. That gives landlords roughly a year to update their processes. If your service charge year ends in March 2026, you may still be operating under transitional arrangements. Ask your landlord which version of the standard they’re following. If they’re still using the old one, you have time to negotiate updates before the deadline hits.
Frequently asked questions
Can my landlord charge me for empty units in the building? ▾
What happens if my landlord doesn’t follow the prescribed format for a demand? ▾
Can I be charged for improvements to the building? ▾
How far back can my landlord claim costs? ▾
Do I need a solicitor to challenge a service charge? ▾
The new rules give commercial tenants more protection than ever before, but those protections only work if you use them. Start by checking your latest service charge demand against the prescribed format. If anything’s missing, ask for a compliant version in writing. That single step could save you thousands.
If this was useful, you might also want to read Commercial Property Rental Checklist: Avoid Costly Mistakes in the UK.
Sources and Further Reading
Landlord Disputes: Your Rights as a Commercial Tenant in the UK — A practical guide to resolving disputes without going to court, covering ADR and your legal options.
Service charges in commercial property, 2nd edition. Royal Institution of Chartered Surveyors, 2025.
The new RICS service charge standard: what it is and changes for 2026. Stevens & Bolton LLP, 2025.
New rules for service charge accounting. Cox Hinkins, 2025.
