If you rent commercial space in the UK, the service charge is often the part of the bill that feels the least transparent. You see the figure, you pay it, but working out whether your share is fair can feel like trying to read a contract in a language you don’t speak. I’ve covered property and leasing for years, and the question I hear most often from tenants isn’t about the rent — it’s about the service charge apportionment. How did they arrive at that number, and is it even correct?
That lack of clarity matters because the amounts involved are often substantial. The updated RICS professional standard, which came into force on 31 December 2025, is the biggest shake-up in service charge governance in nearly a decade. It introduces mandatory apportionment matrices, fixed management fees, and a clear ban on recovering certain costs through the service charge. If you’re a tenant, this is the moment to understand exactly what you should be paying — and what you shouldn’t. Here’s what you actually need to know.
Before we go further, if you’re comparing your options between leasing and buying, it’s worth reading our guide on commercial renting versus buying in the UK — it puts the service charge question into a bigger financial picture. And if you’re dealing with a dispute over your bill, speaking to a tenant landlord lawyer can help clarify your position before things escalate.
What Service Charge Apportionment Actually Means
The most important thing to understand is that apportionment is the method used to divide the total cost of running a building between the tenants who occupy it. It sounds simple, but the way that division is calculated can vary wildly from one lease to the next. Some use floor area, others use rateable value, and some use a fixed percentage that hasn’t been updated since the building was built. The new RICS Standard doesn’t override your lease — the lease is still the starting point — but it does set a benchmark for what is considered reasonable. If your apportionment seems off, the Standard is increasingly treated by courts and dispute resolution bodies as the reference point for fairness.
What I’d do if I were a tenant right now is pull out the most recent service charge statement and check whether it includes an apportionment matrix. If it doesn’t, that’s your first red flag. The Standard says landlords must provide one, and if yours hasn’t, you’re entitled to ask why. For a deeper look at how these charges work in practice, our article on navigating landlord service charges covers the common pitfalls.
Why the New Standard Changes Things for Tenants
Before December 2025, tenants had limited leverage when questioning a service charge. The lease said what it said, and challenging it often meant expensive legal action. The new Standard changes that dynamic. It’s mandatory for all RICS members and RICS-regulated firms, meaning your landlord or managing agent is expected to comply. Non-compliance can lead to disciplinary proceedings and reputational damage. That gives tenants real bargaining power.
Take the issue of timing. Landlords must now issue budgets at least one month before the service charge year starts, and year-end accounts must be provided within four months of the year ending. If those deadlines are missed, the landlord must explain why. That might not sound revolutionary, but in practice it means tenants get visibility of costs before they’re incurred, not after. According to Broadfield Law’s analysis of the updated Code, this earlier visibility gives tenants a much clearer understanding of expected costs during lease negotiations.
Here’s a scenario: you’re in a mixed-use building with retail on the ground floor and offices above. Under the old system, the landlord might have apportioned the cost of a new roof equally across all units. Under the new Standard, that apportionment must be transparent and justifiable. If the retail units have a smaller footprint, your share should reflect that. The apportionment matrix makes it possible to check.
What I notice is that tenants often assume the service charge is non-negotiable. It isn’t. The Standard is increasingly used as a benchmark in lease negotiations, and advisers on both sides are relying on it. If you’re renewing a lease or negotiating heads of terms, you can request that the service charge provisions align with the Standard. That’s a reasonable ask, and one that landlords are increasingly expecting. For more on finding the right location and understanding local market dynamics, take a look at our piece on underrated commercial hubs across the UK.
Where Tenants Commonly Get Caught Out
The new Standard clears up several areas where tenants have historically been overcharged. Here are the mistakes I see most often, and what you can do about them.
Paying for Void Property Costs
One of the biggest changes is that void property costs — including rates, insurance, and services attributable to empty units — must not be recovered through the service charge. Under the old system, landlords often passed these costs on to the remaining tenants, effectively making you subsidise their empty space. The Standard now explicitly bans this. If you see a line item for “void costs” on your statement, challenge it. The landlord cannot recover marketing costs for empty units either.
Management Fees Based on a Percentage
Management fees calculated as a percentage of the total service charge are no longer allowed. The fee must be fixed at the start of the service charge year. Why does this matter? Because a percentage-based fee gives the landlord an incentive to inflate costs — the higher the service charge, the higher their fee. A fixed fee removes that conflict of interest. Check your most recent statement. If the management fee is expressed as a percentage, that’s a non-compliance issue under the new Standard.
Capital Costs Disguised as Repairs
Initial capital costs — original fit-out, installation of new plant or equipment, or improvement works that go beyond repair or replacement — must not be recovered through the service charge unless expressly justified and agreed. I’ve seen cases where a landlord replaces an ageing boiler with a significantly upgraded system and tries to pass the full cost to tenants. Under the Standard, only the cost of like-for-like replacement is recoverable. The upgrade element is the landlord’s investment, not yours. If you’re unsure whether a charge qualifies, a property lawyer can review the specific wording in your lease.
Interest on Service Charge Funds
Any money held for service charges that hasn’t been spent yet must be held in discrete or virtual accounts. The interest earned on that money must be credited to the service charge account, not kept by the landlord or managing agent. After bank charges and tax, that interest reduces the overall cost to tenants. If you’ve never seen interest credited to your service charge account, it’s worth asking where it went.
→ Scroll right to see all columns
| Cost Type | Recoverable Under New Standard? | What Changed |
|---|---|---|
| Void property costs | No | Explicitly banned — previously often passed to tenants |
| Management fees (percentage-based) | No | Must now be fixed at start of year |
| Initial capital costs | No (unless agreed) | Only like-for-like repairs are recoverable |
| Negligence-related costs | No | Poor maintenance costs cannot be passed on |
| ESG expenditure | Only if genuine service | Other ESG initiatives funded by landlord |
How to Check Your Service Charge and Challenge It
Writing about topics like this takes real time and research. If you buy something through an Amazon link on this page, I may earn a small commission — at no extra cost to you. It’s one of the things that makes it possible to keep BritWealth free to read. I only link to products that are genuinely relevant to the article.
The new Standard gives you the tools to verify your service charge, but you still need to use them. Here’s a practical process for checking whether your apportionment is fair and what to do if it isn’t.
Request the Apportionment Matrix
This is your starting point. Under the Standard, the landlord must provide an apportionment matrix with every budget and year-end account. The matrix should show the total costs, the basis of calculation (floor area, rateable value, or another method), and the individual liability for each unit. If you don’t have one, write to the landlord or managing agent and request it. They are obliged to provide it. Once you have it, check whether your share matches the proportion of the building you occupy. If the building has 10 units of equal size and you’re paying 20% of the service charge, something is off.
Compare Budget to Actuals
Look at the budget you received at the start of the year and compare it to the year-end accounts. The Standard requires that year-end accounts show a true and accurate record of actual expenditure. If there’s a significant overspend, the landlord should explain it. If the management fee changed mid-year, that’s a red flag — it should have been fixed at the start. A financial advisor can help you interpret the numbers if the accounts are complex.
Identify Non-Recoverable Costs
Go through the line items and flag anything that falls into the non-recoverable categories: void costs, landlord investment costs, initial capital works, negligence-related costs, and future redevelopment costs. If you see any of these, challenge them in writing. The Standard is clear — these costs must not be recovered through the service charge. If the landlord pushes back, remind them that the Standard is mandatory for RICS members and that non-compliance can lead to disciplinary proceedings.
Use Alternative Dispute Resolution First
If you can’t resolve the issue directly, the Standard recommends mediation or independent expert determination before going to court. These methods are typically quicker and more cost-effective. Your lease may already include a dispute resolution clause. If not, you can propose ADR as a first step. For more on the practical side of lease negotiations, our guide on finding a commercial land lease covers the key terms to watch for.
- 1Request the Apportionment MatrixWrite to the landlord or managing agent and ask for the full apportionment matrix for the current and previous service charge year. They must provide it under the new Standard.
- 2Compare Budget to Year-End AccountsCheck whether the budget issued before the year started matches the actual expenditure. Any significant variance should come with an explanation from the landlord.
- 3Flag Non-Recoverable CostsIdentify any void costs, capital works, or negligence-related charges. Challenge these in writing, referencing the Standard’s requirements.
- 4Propose Alternative Dispute ResolutionIf the landlord disagrees, suggest mediation or independent expert determination before considering court action.
What About ESG Costs?
The Standard introduces new guidance on environmental, social, and governance (ESG) expenditure. Landlords can only include ESG costs in the service charge where they constitute a genuine service. All other ESG initiatives — such as sustainability reporting or carbon offset programmes that don’t directly benefit the building’s operation — must be funded by the landlord. If you see a line item for “green initiatives” or “sustainability projects,” ask whether it qualifies as a genuine service under the Standard. If it doesn’t, it shouldn’t be on your bill.
Frequently Asked Questions
Can my landlord still use a percentage-based management fee if my lease says so? ▾
What happens if my landlord isn’t a RICS member? ▾
Can I be charged for the landlord’s legal fees in preparing the service charge? ▾
What if the service charge budget arrives less than a month before the year starts? ▾
Does the new Standard apply to residential service charges? ▾
The new RICS Standard is the most significant shift in service charge governance in nearly a decade, and it gives tenants more leverage than they’ve had before. The key is to use it proactively — request the apportionment matrix, check for non-recoverable costs, and don’t be afraid to challenge charges that don’t add up. If this was useful, you might also want to read essential tips for renting a roadside retail space in the UK.
Sources and Further Reading
Commercial property hotspots in the UK — A look at where the best leasing deals are available right now, with regional market context.
The new RICS Service Charge Standard: what it is and changes for 2026. Stevens & Bolton, 2026.
The new RICS Service Charge Code: what landlords, tenants and advisers need to know. Broadfield Law, 2026.
