Over the past few years, I’ve watched service charge disputes become one of the most common headaches for businesses renting commercial space in the UK. The numbers back that up — the government’s 2025 consultation identified that high costs from tribunal and court disputes were one of four major problems the system needed to fix. If you’re a tenant, that means the money you pay each year for maintenance, insurance, and shared services has been far too easy for landlords to manage in ways that leave you in the dark. Here’s what you actually need to know.
These aren’t just bureaucratic tweaks. The Leasehold and Freehold Reform Act 2024 (LAFRA 2024) and the updated RICS Service Charge Code 2025 represent the biggest overhaul of service charge regulation in decades. If you’re renting commercial space — or thinking about it — the rules around what you can be charged, when, and how you can challenge it have shifted significantly. I’ve been covering property law changes for a while now, and this is one of those moments where the practical impact on your bottom line is immediate. If you want a broader view of what to watch for when signing a lease, key considerations when renting a commercial space covers the full picture.
What a service charge precedent actually means for your lease
The most important thing to understand is that the new RICS standard — which came into force on 31 December 2025 — is not legislation. It cannot override the terms of your lease. What it does is set a benchmark for professional standards. If your landlord is a RICS member or a RICS-regulated firm, they must comply with it unless they have a good reason not to, and they have to justify any departure. That distinction matters because it gives you leverage, but it doesn’t give you automatic legal rights.
What I’d do in your position is treat the RICS standard as the floor, not the ceiling. If your landlord is already following it, you’re in a good position. If they’re not, you have a clear basis for asking questions. The standard requires landlords to issue budgets at least one month before the service charge year starts, and year-end accounts within four months of the year ending. Any delay needs an explanation. That alone is a huge improvement over the old system where tenants often received reconciliations months late with no justification.
Why the new rules matter for your business right now
The practical effect of these changes is that you now have more power to challenge charges that don’t add up. Under the old system, tenants often paid whatever the landlord demanded because the cost of disputing it — both in time and money — was too high. The government’s consultation found that limited access to supporting documents and invoices was one of the core problems. Now, landlords must provide access to contracts with suppliers, invoices and receipts, insurance policies and commission details, fire risk assessments, and historic records going back six years.
Consider this scenario: your landlord charges you £15,000 a year in service charges. You suspect the management fee is inflated because it’s calculated as a percentage of total spend — the old way. Under the new RICS standard, management fees must be fixed at the start of the service charge year. If your landlord is still using a percentage model, you can ask why. If they can’t justify it, you have grounds to challenge the charge. That’s real money back in your pocket.
One pattern I’ve noticed is that smaller tenants — the ones renting a single floor in a mixed-use building — are often the least likely to push back on service charges because they assume they don’t have the leverage. The new rules change that. You now have a statutory right to see the underlying documents. If you want to understand how to use that right effectively, essential tips for tenant service charge audits walks through the process step by step.
Where tenants and landlords go wrong with the new rules
The biggest mistakes I see fall into a few clear categories. Each one costs someone money, and each one is now easier to avoid or fix.
Ignoring the 18-month time limit on cost recovery
This is the most consequential change for landlords, and the most protective for tenants. Under the Landlord and Tenant Act 1985, the 18-month rule already existed, but LAFRA 2024 tightens it. Landlords cannot recover costs incurred more than 18 months before the demand is issued unless they serve a prescribed notice within that window. If your landlord sends you a demand for work done two years ago and they never notified you, you can refuse to pay. I’ve seen landlords try to bundle old costs into annual reconciliations hoping tenants won’t notice. Now, you have a clear legal basis to push back.
Not checking whether costs are recoverable under the lease
The RICS standard now explicitly lists costs that must not be recovered through the service charge. These include landlord investment costs like asset management and rent collection, void property costs like rates and insurance on empty units, initial capital costs like original fit-out or new plant equipment, future redevelopment costs, and negligence-related costs from poor maintenance. If your lease says you’re liable for these, the lease terms still apply — but the RICS standard gives you a strong argument that the charge is unreasonable. If you’re negotiating a new lease, you can push to exclude these items explicitly.
Failing to request supporting documents
Many tenants simply pay the demand without asking to see the invoices. Under the new rules, you have the right to see contracts with suppliers, invoices and receipts, insurance policies and commission details, fire risk assessments, and six years of historic records. If your landlord refuses, that refusal itself may be a breach of the standard. A guide to tenant service charge documentation explains exactly what to ask for and how to frame the request.
Overlooking insurance commission disclosure
Under LAFRA 2024, landlords must disclose any commission or payment they receive from building insurance policies. If they fail to do so, they cannot recover the insurance premium through the service charge. This is a straightforward check: ask your landlord for a breakdown of the insurance premium and any commission they receive. If they can’t or won’t provide it, you may have grounds to withhold that portion of the charge.
→ Scroll right to see all columns
| Cost type | Recoverable? | Key condition |
|---|---|---|
| Management fees | Yes, with limits | Must be fixed at start of year, not a percentage of spend |
| Insurance commission | Only if disclosed | Must be declared in service charge accounts |
| Void property costs | No | Rates, insurance, services for empty units |
| Initial capital costs | No | Original fit-out, new plant, improvement works |
| Negligence-related costs | No | Arises from avoidable overspending or poor maintenance |
| ESG expenditure | Only genuine services | Other ESG initiatives funded by landlord |
How to protect your business from unfair service charges
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The new rules give you more tools, but you still need to use them. Here’s the practical sequence I’d follow.
Audit your current service charge demands against the new standards
Start by checking whether your landlord is using the prescribed format for demands. Under LAFRA 2024, the demand must include the names and addresses of both parties, the total amount based on the annual budget, the period covered, payment deadlines and consequences, and a summary of your rights. If any of these are missing, the demand may be unenforceable. Next, check whether the budget was provided at the start of the service charge year. If it wasn’t, that’s a breach of the RICS standard. If you’re dealing with a complex lease and need professional advice, speaking with a tenant landlord lawyer can clarify whether your specific situation gives you grounds to challenge a charge.
Request supporting documents and review them carefully
Send a written request to your landlord or managing agent asking for the documents you’re entitled to under the new rules. Be specific: ask for contracts with suppliers, invoices for work carried out, insurance policies and commission details, fire risk assessments, and historic records going back six years. If they refuse or delay, note that the RICS standard requires any delay in providing accounts to be accompanied by an explanation. If you don’t get one, that’s another point in your favour. A guide to tenant service charge documentation has template letters you can adapt.
Challenge non-recoverable costs and inflated management fees
Go through the list of non-recoverable costs in the table above. If you see any landlord investment costs, void property costs, initial capital costs, or negligence-related costs in your service charge, flag them in writing. For management fees, check whether they’re calculated as a fixed amount or a percentage of total spend. If it’s a percentage, ask for justification. The RICS standard says fees should be fixed at the start of the year. If your landlord can’t explain why they’re using a different method, you have a strong basis to dispute the fee.
Use alternative dispute resolution before going to tribunal
The RICS standard now says parties should seek to resolve differences through Alternative Dispute Resolution (ADR) before going to court. This is cheaper and faster for both sides. If you have a dispute, write to your landlord proposing ADR. If they refuse, that refusal may count against them if the matter eventually reaches a tribunal. And under LAFRA 2024, landlords cannot recover tribunal or court costs through the service charge unless a tribunal specifically orders otherwise — so the financial risk of disputing is now much lower for you.
Frequently asked questions about UK service charge precedents
Can my landlord charge me for empty units in the building? ▾
What happens if my landlord doesn’t follow the prescribed demand format? ▾
Does the RICS standard apply to my lease if my landlord isn’t a RICS member? ▾
Can I withhold service charges if I’m disputing them? ▾
How far back can I request service charge records? ▾
What counts as a non-recoverable initial capital cost? ▾
Sources and Further Reading
Understanding institutional leases for UK commercial spaces — Explains how institutional leases differ from standard agreements and what that means for service charge provisions.
Navigating service charges when renting in the UK — A broader overview of service charge structures, common pitfalls, and tenant rights.
New rules for service charge accounting. Cox Hinkins, 2025.
The new RICS service charge standard: what it is and changes for 2026. Stevens & Bolton, 2026.
If this was useful, you might also want to read Is your UK business paying too much rent? The benchmark every CEO needs to know.
