Are you an occupier?

A review of your service charge and insurance liability can achieve savings and reduce occupier costs.

We ensure your service charge and/or insurance is being demanded correctly, is fair and reasonable and represents value for money.

Charges are challenged where appropriate and further information requested as needed. We have had significant success in reducing liabilities for our clients. Our team help to ensure transparency and accuracy in your outgoings at all stages of your occupancy cycle.

Is benefit being taken into consideration in your service charge?

Are you getting value for money?

Are your demands correct?

Have you previously reviewed your service charges or insurance costs?

Are any major works being undertaken?

Do they comply with the lease terms?

Has best practice been taken into account?

Service charge review

We average 25% of service charge payables as a saving for our clients.

Whether it’s a portfolio or a single site, we review your service charge costs to make sure they are:

· Recoverable under the terms of the lease

· Reasonable

· Provide value for money

· Benefitting you as occupier

· In accordance with best practice

· And that the calculations are correct

If the service charge has manifest errors, you may be due a refund.

Under the Statute of Limitations, we can go back up to 6 years (5 in Scotland) to obtain a refund on your service charges where there is an error and a refund is due.

Nothing can override the terms of the lease. Each lease is unique, and the basis for recovery, and how service charges are to be administered is outlined within. This includes recoverable items, caps and apportionments, and any exclusions. Landlords and occupiers must abide by these provisions. We have extensive experience in reviewing leases to ensure recovery is correct

Benchmarking

We have a wealth of data that we use to benchmark service charge costs to see whether a building is running at a similar level to other comparable sites.

Benchmarking service charges as an occupier is crucial to ensuring value for money and understanding whether your costs are comparable to similar sites. If costs at your building are running higher than market trends, it may be that you are paying too much for your service charge.

Best practice

The main aim of the RICS Professional Statement for Service Charges in Commercial Property is to ensure that service charges are transparent, fair and uniform.

We can help to make sure that your landlord is complying with the guidelines and mandatory elements of this statement.

As part of our portfolio reviews, we ensure that all budgets and reconciliations are issued within the timescales set in the Professional Statement.

Invoice verification and accounting reviews

We review and verify invoices to ensure charges are:

· Correct

· Consistent with lease terms

· Match your service charge documentation.

We ensure all payments made are considered and request refunds where applicable. We also offer a full treasury function on behalf of our clients.

As part of our accounting reviews, we ensure all service charge credits are issued, including those relating to balancing reconciliations. This involves reviewing ledger statements to identify any discrepancies and ensuring all credits have been applied to our clients’ accounts.

Funds

Are you paying towards a sinking or reserve fund in your service charge?

Any funds are checked to make sure that recovery is permitted under the lease terms and that any monies are being held in line with best practice. All withdrawals are reviewed to ensure the relevant expenditure is recoverable and reasonable.

Major works

Major works can come with a hefty price tag, but it may be that you’re not liable to pay for all the costs. We review planned works to check that:

· Proposals comply with lease terms in relation to recovery

· The full scope of works is needed

· The costs are reasonable

We also review and monitor planned works for improvements to the building, challenging recovery where applicable.

Insurance review

We average 25% of insurance payables as a saving for our clients.

We review the lease for each demise to work out:

· Who is responsible for insuring the property

· How the costs are to be apportioned

· Number of years loss of rent to be insured

· Which insured risks are to be covered

We compare the above data to the insurance documents obtained for the property to ensure:

· The demises are all covered

· Correct insurance policy is in place

· An account of the charges is documented

· Compliance with lease terms in relation to loss of rent and insured risks

· Invoices and premiums are correct.

Stay/go decisions and draft leases

The team provide advice on service charge and insurance matters during discussions surrounding deciding whether to renew or move site, dispose of a lease, or take a new lease.

We provide analysis service charges in the existing building and sites you are thinking of moving to, comparing these to the market to make sure they provide value for money. We can look to see where reductions in liability could be achieved.

We give pre-emptive advice on draft lease terms in relation to service charges and insurance, providing recommendations on onerous clauses and ways to reduce liability as well as considering the benefit of each cost category in your occupation.

Financial planning

Our high standard of reporting is viewed as invaluable by our clients for annual forecasting of service charges and insurance.

We provide them with accurate budgeting, advising on forecast increases and reductions in liability as well as sites where there is a need to accrue funds.

CLIENT TESTIMONIAL

“We also developed a robust financial forecasting strategy [for service charge and insurance] with the Avison Young Team which enabled us to provide more accurate financial budgeting to the Business as a whole.”

Service Charge Manager - Commercial Property Management, Development and Investment Company

Green evolution

We’re supporting collaboration on reducing carbon emissions in buildings by helping our occupier clients influence and engage with their landlords.

We are providing occupiers the opportunity and data they need to discuss green initiatives and sustainable changes they want to see at the buildings they occupy. Working together with our occupier clients, we use data to establish strategic progress in many areas of carbon impact and to make energy improvements at the sites they occupy.

GREEN EVOLUTION BLOG

If not now, when?

Property portfolios offer a number of cost-saving opportunities. Many businesses look to real estate specialists for guidance on the best strategies. Occupiers of space within a building owned by someone else, and where they are subject to a “service charge” payment, should consider;

Have you previously reviewed your service charges?
Does the service charge comply with the lease terms?
Has best practice been taken into account?
Are any major works being undertaken?
Is benefit being taken into consideration?
Are you getting value for money from your service charge?

Avison Young’s impact

At Avison Young, we have a team who are solely dedicated to reviewing service charge liability. Our team carry out a detailed examination of service charges recovered from occupiers to ensure lease compliance, best practice and value for money in the services provided by their landlords. Charges are challenged where appropriate and savings are often secured. We have had significant success in reducing liabilities for our clients – and during 2021 we made £4.5m of savings for our occupier clients.

How we can help

Our team are able to help at all points of the occupancy life-cycle. From pre-occupation through to post-occupation, there are key intervention opportunities to review your service charge costs, and any potential to contain costs further.

Our Avison Young professionals have expertise in the following areas:

Pre-occupation

Draft lease review: remove onerous clauses and ensure you consider benefit
Review of proposed / current service charge budget
Value for money
Best practice compliance

Occupation

Issue of budgets and reconciliations in a timely manner
Service charge audit
Lease compliance
Value for money
Adherence to RICS Professional Statement
Best practice
Major works review
Funds review
Invoice verification
Apportionments and caps

End of occupation

Service charge audit
Funds review
Account ledger reconciliation
Ensure all service charge documentation has been issued
Best practice

Post occupation

Retrospective service charge review
Ensure accounts correct and all credits issued

Our services

Our approach to a service charge review is to first understand your needs in the context of your own organisation, portfolio and buildings. We then work with you to create a tactical plan, tailored around those priority areas. We can;

Audit to secure savings

We ensure that the service charge costs being charged to you are:

● Recoverable under the terms of the lease

● Reasonable

● Provide value for money

● and that the maths is all correct.

If the service charge includes costs that are not included in the terms of the lease or has other manifest errors, you may be due a refund. Under the Statute of Limitations, you can go back up to six years (five in Scotland) to obtain a refund on your service charges where there is an error, and a refund is due.