Service charge meaning

Funder’s primary objective When a buyer takes property subject to overage and seeks finance secured on that asset, a funder will require assurance that the overage provisions do not obstruct or curtail enforcement of its security. The lender must be confident its charge constitutes sound security over the property. Property and associated rights Assess the character of the site to be charged. Where it forms part of a broader development, consider whether, on a power of sale being exercised, the property will depend on rights over adjoining land held (or to be acquired) by the buyer, such as: rights of way rights concerning service media rights of support If such rights are necessary, agree a form of deed of easement to be annexed to the charge, and allow the funder to require grant of that easement when needed. Also examine whether the seller’s chosen mechanism for securing the overage is acceptable to a funder...

This Checklist sets out the trigger points and timescales for serving a landlord’s certificate and a former landlord’s certificate under the Building Safety Act 2022 (BSA 2022), together with the consequences of failing to meet the relevant statutory duties. For full guidance, see Practice Notes: Building Safety Act 2022—landlord’s certificate Building Safety Act 2022—landlord and tenant issues In England, the prescribed requirements for landlord’s certificates are contained in the Building Safety (Leaseholder Protections) (England) Regulations 2022, SI 2022/711, regs 1 and 6, as amended from 5 August 2023 by the Building Safety (Leaseholder Protections etc) (England) (Amendment) Regulations 2023, SI 2023/895, regs 10, 11 and 13. All references to SI 2022/711 are, accordingly, to those regulations as amended. Trigger events and timing Has the current landlord (as described in SI 2022/711, reg 1(3) as the ‘person who is the landlord under a lease of premises in a relevant building’) implemented a process to ensure a landlord’s certificate is supplied...

Repair under the common law Under the common law, a landlord, relative to a tenant, bears notably heavy duties regarding upkeep and repair of the leased premises, see Practice Note: Repair clauses in commercial leases in Scotland—Repair under the common law. Within commercial leasing, landlords will almost invariably aim to exclude all such common law repairing liabilities for the demised premises, though not for common areas in multi-let buildings; see Practice Note: Service charge and outgoing provisions in commercial leases in Scotland. Consequently, tenants usually shoulder substantial repair commitments. The prevalent model is the full repairing and insuring (FRI) lease, under which the tenant assumes responsibility for repairs of every kind save for damage arising from insured risks; see Practice Note: Repair clauses in commercial leases in Scotland—Contracting out of the common law—the full repairing and insuring (FRI) Lease and The modern commercial lease: Stair Memorial Encyclopaedia [466]...

In this issue: Key developments and horizon scanning Transferring property Property insolvency Property taxes Easements, rights and covenants Property in Scotland Leasing property LexTalk®Property: a Lexis®Nexis community Additional property updates this week Daily and weekly news alerts Trackers New Q&As Key developments and horizon scanning Leasehold and Freehold Reform Act 2024 The Leasehold and Freehold Reform Act 2024 (LFRA 2024), which gained Royal Assent on 24 May 2024 and featured in last week’s highlights, has now been published. Sections 113 (controls on remedies for arrears of rent charges), 117 (recovery of legal costs etc through service charge), 118 (repeal of section 125 of the Building Safety Act 2022) and 119 (higher-risk and relevant buildings: insolvency notifications) take effect two months after Royal Assent (24 July 2024). The rest of LFRA 2024 will commence by regulations to be made by the new government after the election. See: LNB News 04/06/2024 14. ...

Mergers CMA issues interim report in GXO/Wincanton merger phase 2 investigation; provisionally finds competition concerns The CMA has published its interim report and interim notice on the completed takeover of Wincanton Plc (Wincanton) by GXO Logistics, Inc (GXO). GXO is the world’s largest contract logistics services company. Wincanton, a UK‑based business, also provides these services. Both organisations supply mainstream contract logistics services (CLS) to business customers in retail—such as groceries, fashion, and apparel—and in non‑retail—such as manufacturing and construction—sectors. In its phase 1 review, the CMA determined that the merger gives rise to a realistic prospect of an SLC, stemming from horizontal and unilateral effects in the provision of mainstream CLS across the UK...

In this issue: Companies and corporation tax Stamp taxes VAT Individuals and income tax Taxes management and litigation Employment taxes Budget and Finance Bills Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Court of Appeal decides interest on intra-group loans not restricted under transfer pricing rules but debits disallowed under unallowable purpose rule (BlackRock Holdco 5, LLC v HMRC) BlackRock Holdco 5, LLC v HMRC [2024] EWCA Civ 330 considers whether, for UK tax purposes, interest on intra‑group borrowing put in place to help fund a commercial acquisition is deductible. Two principal points were before the Court of Appeal: the transfer pricing analysis and the loan relationships unallowable purpose question. On the transfer pricing limb, the Court of Appeal allowed the taxpayer’s appeal. As a result, deductions for interest on the intra‑group loans were not curtailed by the transfer...

What is a service charge? A service charge is a sum a tenant may have to pay to a landlord under a commercial lease to reimburse the landlord for services they provide in connection with the common parts and for the upkeep of the property. Commonly, this applies where multiple tenants occupy one property, for example a shopping centre, and the landlord looks after the communal parts of the building for everyone’s benefit. In most contemporary leases the tenant pays the service charge on account, before the landlord incurs the expenditure, calculated from an estimate of the next year’s costs. At the close of the accounting period a reconciliation is prepared and any shortfall or surplus is settled by or to the tenant. Sometimes, earlier forms of lease stipulate that the landlord must meet the outlay first. For more detail on service charges ordinarily charged to tenants of multi-occupied buildings by commercial landlords in Scotland, see Practice Note: Service charge and outgoing provisions in commercial leases in Scotland. ...

FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework: In 2027, stamp duty and SDRT are set to be superseded by a single, self‑assessed tax on securities — the securities transfer charge (STC) — to be paid and reported via a new online portal. The STC’s core features are expected to broadly reflect the proposals consulted on in 2023. Finance Act 2026 (FA 2026) confers a power for secondary legislation to let taxpayers trial the digital service, self‑assessing their stamp taxes on securities liabilities and submitting transactions electronically. For further details on the modernisation of stamp taxes on securities, see: News Analyses: Budget 2025—Tax analysis—Stamp and transfer taxes Tax update spring 2025—Stamp taxes on shares modernisation Tax update spring 2025—Tax analysis—Stamp and transfer taxes TAMD 2023—Stamp taxes on shares modernisation TAMD 2023—consultation—stamp taxes on shares Tax Administration and Maintenance Day—27 April 2023—Stamp and transfer taxes The government also consulted on modernising and clarifying...

The Employment (Allocation of Tips) Act 2023 (E(AT)A 2023) The Employment (Allocation of Tips) Act 2023 (E(AT)A 2023) imposes a statutory duty on employers in all industries to pass on to workers, without deductions, every tip, gratuity and service charge they receive or over which they hold control or material influence (qualifying tips), and to ensure distribution is fair and transparent. While it leaves untouched the rules on the taxation of tips, gratuities and service charges, its purpose is to guarantee that customer payments of this kind are allocated to workers. The Act is reinforced by a statutory Code of Practice on Fair and Transparent Distribution of Tips, together with non-statutory guidance. For further detail on the legal framework governing the payment and allocation of tips, gratuities and service charges, see Practice Note: Allocating tips, gratuities and service charges to workers. That Practice Note considers the tax treatment of tips and commission, which remains unaffected by E(AT)A 2023. The basic position is that both tips and commission, irrespective of...

1 Legal costs 1.1 The legal costs of [ insert brief description of services, eg obtaining a grant of probate and distributing an estate ] consist of [ two OR three ] principal elements: our fees; outlays we pay on your behalf (often referred to as disbursements) [ ; OR . ] [ costs you may need to pay to another party. ] 1.2 Our charges We apply a fixed-fee structure [ of £[ insert price excluding VAT ] OR ranging between £[ insert price excluding VAT ] and £[ insert price excluding VAT ] depending on [ insert description of the factors that will dictate where in the fixed price range your fees will fall, eg the value and complexity of your matter ] ] . [ If a matter or transaction does not reach completion, we reserve the right to charge for the work undertaken, using our standard charging rate of £[ insert rate...

1 Reserve Fund 1.1 Definitions In this clause, the following further definitions apply: Fund Account – an interest‑bearing [ trust ] account [ opened with [ name of bank ] ] held in the Landlord’s name; Reserve Fund – a fund that the Landlord may, though is not obliged to, set up and keep from time to time to receive and hold a Reserve Fund Contribution; Reserve Fund Contribution – the sum (if any) in each Service Charge Period that the Landlord [ (acting reasonably) ] determines to be a fair annual payment by the Tenant towards the advance funding of [ providing the Services OR regularly‑recurring major items of [ the Service Costs OR service charge expenditure ] ] [ (including, but not limited to, repair, decoration, maintenance and renewal) ], and including any VAT payable where the Landlord cannot obtain a credit for that VAT from HM Revenue & Customs...

TO: [ insert full name of tenant ] of [ insert address ] (the ‘Tenant’) [ together with [ insert full name of recognised tenant’s association ] of [ insert address ] (the ‘RTA’) ] FROM: [ insert full name of landlord ], being the [ freehold OR long leasehold ] proprietor of the building known as [ insert address ] (the ‘Landlord’) RE: NOTICE OF INTENTION DATED [ DATE OF NOTICE OF INTENTION ] (the ‘Notice of Intention’) [ THE LANDLORD, OR WE [ NAME OF SOLICITORS OR AGENTS ], ACTING AS [SOLICITORS AND] DULY AUTHORISED AGENTS FOR AND ON BEHALF OF THE LANDLORD, ] HEREBY GIVE[S] NOTICE IN THE FOLLOWING TERMS: The relevant period stated in the Notice of Intention ended on [ insert date ]...

For the purposes of this Q&A, it is assumed that: the leasehold property forms part of the unadministered Estate the Estate bears the primary responsibility to pay the service charge the beneficiaries in occupation have a right to occupy the leasehold property Whilst the Estate is being administered, legal ownership of the deceased’s unadministered assets is vested in the personal representatives (PRs) for the purposes of administration and to carry out that administration. In the meantime, no beneficiary, whether taking under the deceased’s Will or by intestacy, has any proprietary interest in any particular or identifiable asset comprised within the unadministered Estate, nor any enforceable claim to such an item. See Practice Note: Beneficiaries’ rights and remedies. The PRs hold extensive powers to administer and manage the deceased’s Estate...

Public Contracts Regulations 2015 (PCR 2015), SI 2015/102, reg 33(2) defines a framework agreement as: Regulation 33(2) of the Public Contracts Regulations 2015 (SI 2015/102) describes a framework agreement as an arrangement between one or more contracting authorities and one or more economic operators, intended to set the terms that will govern contracts awarded over a specified period, notably concerning price and, where appropriate, the quantities anticipated. The Crown Commercial Service (CCS) guidance interprets a framework agreement as a broad term for arrangements with providers that lay down the terms and conditions under which agreements for specific purchases—referred to as call-off contracts—can be put in place throughout the life of the agreement...

As a broad principle, obligation to observe or give due consideration to the Service Charge Statement rests solely with RICS members and firms regulated by RICS. Where neither the client nor its surveyors hold RICS regulation, they are under no duty to adhere to its requirements. As a practical reminder, solicitors who are not part of RICS do not have to comply with the Service Charge Statement; however, they ought to recognise that their RICS-registered clients, and/or any RICS-registered colleagues within their organisations, might still be required to comply with the Service Charge Statement...