The commercial property sector is a significant part of the UK economy and service charges play a crucial role in commercial management.

In 2024, the Royal Institution of Chartered Surveyors (RICS) launched a public consultation on its Service Charges in Commercial Property Professional Standard. This consultation is now completed, and we are awaiting RICS’s publication of the second edition of the updated professional standard in summer 2025.

Understanding & background to RICS service charges

RICS provides guidance on service charges for commercial properties to ensure best practice across the industry. RICS requires its members to comply with the requirements and crucially, the Standard aims to provide guidance to landlords on how they can recover costs for managing and maintaining their commercial properties, which is often an area of dispute. Property managers and chartered surveyors collaborate to ensure quality service standards and effectively manage service charge costs.

RICS public consultation for its Service Charges in Commercial Property professional standard

In 2024, RICS launched a public consultation pointed at those that work in the property sector, including managers, landlords, occupiers, and industry stakeholders to collect their views on setting new best practices for the management and administration of service charges in the future.

The consultation places greater emphasis on key challenges in managing service charges. The focus is ensuring that service charge accounts are open, uniform, and transparent across the industry and fostering better relationships between all parties concerned.

The consultation has looked at areas such as:

• The timing of budgets and actual expenditure accounts being issued.
• Year-end disputes and guidance on their resolution.
• The negotiation, drafting, interpretation, and operation of leases.
• Certification of service charge accounts.

What may change following the consultation?

Two of the main areas of concern for commercial property managers and landlords are the proposals that service charge budgets must be issued one month prior to the service charge year commencing and the year-end accounts must be issued within 4 months of the year-end.

Another area that may change is the introduction of a Service Charge Exception. Currently, Service Charges can include enhancements to the fabric of the building and plant or equipment, as long as they have been communicated and evidenced to tenants, along with undertaking a reasonable cost-benefit analysis.

Changes to the professional standard will undoubtedly increase the pressure and duties on property managers to collate and share service charge accounts and budgets within short timescales.

When will the changes apply?

RICS has closed the consultation and is assimilating the industry feedback on the proposed mandatory requirements and best practice provisions and anticipate publishing the 2nd edition of its Service Charges in Commercial Property Professional Standard in summer 2025.

If the proposed amendments are implemented in the 2nd edition of the professional standard, the changes are anticipated to be applied to commercial service charges commencing 6 months from issue.

Are you ready for these changes?

If these changes are implemented, do you have the right specialist accountancy support to help you meet the deadlines for producing and sharing budgets and year-end accounts?

Barnes Roffe has a specialist property service charge accounting team that works with many property owners and managers, making this process as hassle-free as possible.

With many years of experience and a vast knowledge in service charge preparation for residential, commercial and mixed-use premises of all sizes and locations, working with Barnes Roffe, you can be confident that you are receiving industry-leading advice and support, with direct Partner access.

We are also able to provide much broader specialist services to our property clients, including:

• Project and investment appraisal
• Preparing business plans
• Accounting and auditing
• Managing cash flow and related forecasts
• Monitoring covenants
• Management accounts
• Risk management strategies
• Specialist tax planning including bespoke structure
• VAT status reviews

If you have any questions about these changes or require advice on service charge accounting, please contact us today.

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