Are you a managing agent or landlord and confused by some of the terminology and requirements when it comes to commercial service charge accounting?
Welcome to our commercial service charge FAQs where we provide valuable insights into various aspects of service charges for commercial properties.
Can I introduce a service charge when subletting corporate real estate?
Where a building is multi-let the owner should consider recovering the costs of maintaining the building through a service charge where the leases allow.
How are insurance claims treated in service charges?
There are multiple ways to treat insurance claims within a service charge, most incur the expense and then either include the invoice within the open service charge or prepay the invoice to wait for the claim to be resolved. The most important point is that it is transparent and consistent, whatever method is adopted there should be a full explanation in the service charge year-end pack under ‘accounting polices’.
What is best practice when dealing with Service charge client bank accounts?
The RICS Client Money Regulations should be adhered to including service charge monies (including reserve funds and sinking funds) must be held in one or more discreet (or virtual) Client bank accounts, cash book reconciliations should be performed at least once every month, employees should have clear segregation of duties and responsibilities and Interest earned on service charge bank accounts must be credited to the service charge account.
Do managing agents need to disclose their fees in service charge tenant packs?
The RICS Professional Statement requires that management fees be set on a fixed fee basis rather than calculated on a percentage basis. All fees charged by the managing agent should be separately disclosed in the notes to the service charge accounts such as Management fees, FM fees, and HelpDesk.
How M+A Partners can help
An experienced service charge accounting team means you will receive professional advice on best practice when it comes to reviewing service charge accounts. Our guidance and services are aligned to the standards of management required in commercial property, including RICS Service Charges in Commercial Property.
Should you require a service charge audit or independent service charge review of your commercial service charge accounts, please get in touch with me using the details below.
Commercial Service Charge Accounting