In multi-occupied buildings with common areas, the landlord will normally repair and maintain the structure and common areas of the property (eg entrance halls, service yards, stairs etc). However, the landlord will expect to recover the full cost of such repair/maintenance from the tenant by way of a service charge. If the landlord provides services to the tenant (eg heating and lighting a reception area, providing a lift service etc) these costs will also be recovered from the tenant via a service charge.
Service charges can represent a significant cost for business tenants and it is important that the service charge provisions in the lease are carefully drafted and negotiated and to ensure that the tenants’ liabilities are appropriate for the property being leased.
When negotiating a new lease, it may be possible to limit your service charge exposure by negotiating a service charge cap.