Commercial service charges—what expenses can the landlord recover?
Commercial service charges—what expenses can the landlord recover?

The following Property practice note provides comprehensive and up to date legal information covering:

  • Commercial service charges—what expenses can the landlord recover?
  • Repair and improvements
  • 'Sweeper' clauses and items not specified in the lease
  • Must the service charge be reasonable?
  • Can a landlord require the tenant to contribute to a sinking fund?

Repair and improvements

A tenant will not generally be expected to pay for the landlord to upgrade or improve its property as opposed to repairing it. The length of a tenant's lease has a bearing on what the tenant can fairly be expected to pay even if the service charge provisions are drawn fairly widely.

However, a covenant to provide a service imposes a wider and potentially more onerous obligation than a covenant to repair, and may entitle a landlord to recover costs of work that goes beyond repair. In such cases, it is the cost of providing the service that will form the recoverable service charge, and the distinction between repair and improvement is unlikely to be relevant. See News Analysis: Covenant to provide services goes beyond covenant to repair (Southwark London Borough v Baharier).

If the lease requires the landlord to consult tenants before carrying out major works, there can be no recovery of the cost of works carried out without consultation.

'Sweeper' clauses and items not specified in the lease

A landlord cannot recover the cost of items which are not clearly included in the lease and which are of no benefit to the tenants. The list of services must be comprehensive as 'sweeper' clauses are likely to be narrowly construed against the landlord and will not allow the landlord to recover an item of

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