1st July 2019

How have the mandatory service charge alterations affected you since the 1st of April? 

Will it lead to businesses being less profitable after old leases run their course and new ones are negotiated? Or will companies just raise their rents to subsidise the loss of income on service charges? Is this even something that will be easy to implement in order to become compliant?

The answer is no one knows! It will be a while before these changes take real effect due to the fact they don’t apply to existing tenants. RICS members and registered companies have now lost the right to charge outlandish amounts for the services they provide, having been capped at 100% of actual cost. This may now be seen as a good thing as tenants at the end of their leases are entitled to fairer and more realistic service charges to cover the services provided by the landlord.

However, in the long term what is to stop landlords raising rents to ensure their profitability due to the loss of extra income from service payments? On the other hand, this regulation doesn’t apply to unregulated firms as well as landlords that don’t instruct MRICS surveyors which may actually be a good thing for the people that come under the new RICS mandatory blanket because their properties may become more desirable to tenants?

To be perfectly frank I don’t have a Clue as I’m not a surveyor, I specialise in real estate recruitment. I would love to hear your experienced opinion on the subject to help expand my knowledge on the industry such as any pros and cons for the alterations as this is pure speculation on my end.

Written by Oscar Chubb – Real Estate Consultant 

If you want to chat about the service charge changes, discuss recruitment needs in your team or interested in talking about your career and job opportunities, see the links below.

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