8 ANALYSIS Breaking the code
With a new code of practice on service charges about to be released, new research shows compliance with the existing code is patchy at best
The RealService Best Practice Group has published its second benchmarking index which shows the extent to which some of the UK’s leading owners and managers are complying with the requirements of the RICS service charge codes for commercial and residential properties. And the results show that property
owners and managers are finding it hard to demonstrate that they are complying with just three simple tenets of the code. The researchers from RealService looked
at just three of the mandatory actions that landlords are required to take. First was the requirement to provide occupiers with a service charge budget for the coming year one month before it was to come into effect. And only 70 per cent of the accounts surveyed could prove that they met this deadline, down from 78 per cent a year ago. Second was the requirement to provide
reconciled financial service charge statements within four months of the end of the service charge year. Here, just 69 per cent of accounts were found to be compliant, the same level as last year.
British Land’s Justin Snoxall, who chaired SHOPPING CENTRE July 2011
www.shopping-centre.co.uk
the RealService Best Practice Group, said: “Many people say they comply with the code, but that’s not enough. You have to be able to demonstrate that you comply.” And he added. “Occupiers say that timeliness of information is crucial if they are to make the right decisions for their businesses.” The third element of the survey looked at
the requirement to transfer a service charge accounts pack to the new managing agent within four months after the completion of a sale of the property. Here, the low level of property transactions meant that only a small sample was available, too small to be statistically valid. But again there was scant evidence of improvement. Snoxall warned: “Owners and agents will
need to focus on this area as in coming years we expect there to be more activity.” However, on a more positive note, more
than half of the landlords surveyed achieved 100 per cent compliance in all three areas. Among those taking part were landlords British Land, Highcross, MAG Developments and Marchday alongside managing agents Broadgate Estates, Colliers, DTZ, GVA, Lambert Smith Hampton, Montagu Evans, Monroe K,
Savills and Smith Young. Liz Peace, chief executive of the British
Property Federation, said: “Our industry now has all the tools to demonstrate that it is adopting and following best practice on service charges. The new RICS code, which comes into effect in October, is a far more user-friendly document than its predecessor, but for peace of mind occupiers also want to know that their service charge managers are compliant.” And service charge consultant John
Gray, chair of the PMA’s shopping centre management sub-committee, said: “The audit gives retailers confidence that the exercise is not just a back slapping one for the participants but does actually take effort to perform.
“It continues to frustrate me, however, that despite considerable global focus on costs these are not always accounted for in a code compliant manner as a matter of course.”
Find out more: For more information, please contact the author
graham.parker@
jldmedia.com
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