RICS Consultation on Service Charges
RICS recently consulted on the second edition of its Professional Standard on Service Charges in Commercial Property, with the edition due to be published in the summer of 2025. RICS is currently reviewing industry feedback on the proposed mandatory requirements and best practice provisions contained within the draft.
The purpose of the consultation was to address key challenges in the management of service charges, including the timely issues of budget and year end certificates. The aim is to reduce the causes of disputes between landlords and tenants and provide clearer guidance on how to resolve these types of disputes.
The draft consultation set out eight mandatory requirements and numerous best practice provisions which will support the core principles of service charges. These included the disclosure of pending insurance claims in relation to costs included in the service charge accounts; disclosure of the sources of income and related income or other benefits to the manager and related entities; a new cost classification and best practices for balance sheets or cash reconciliation which will also be included in the scope of any independent review of the service charge account.
This updated guidance will be highly anticipated by commercial property managers, landlords and occupiers as well as legal property professionals and their clients who will hope it will simplify the management of commercial service charges, whilst ensuring service charge accounts are open and transparent.
Disclosure of contractual controls on land consultation
The government launched a consultation seeking views on its plans, through Part 11 of the Levelling Up and Regeneration Act 2023 (LURA 2023), to provide greater transparency on ‘contractual control agreements’ in England and Wales.
"Contractual controls" refers to ‘agreements, such as option agreements, that are used to control land short of outright ownership’. The government confirmed that the regulations seek to create a dataset comprising the ‘what’, ‘where’, ‘who’ and ‘when’ of contractual control agreements that will promote transparency by providing a reliable and accessible source of information for communities, developers, and other stakeholders by way of a public register where registration and updating information will be mandatory. It is proposed it will be a criminal offence to fail to comply with the requirement to provide the mandatory information or to provide false or misleading information.
The majority of agreements used between developers and landowners to secure land for development could be classed as contractual control agreements, and these could be disclosable if those agreements are in writing, subsist for 12 months or more and qualify as a disclosable agreement under the LURA 2023. This could include option agreements, pre-emption agreements, promotion agreements or conditional contracts. It is important to note however, that some agreements are excluded from the scope of the proposed regulations such as overage and clawback agreements and restrictive covenants.
These regulations are expected to be implemented in 2026, however this may change given the change in government following the 2024 summer election.
