Jurisdiction(s):
United Kingdom

Key definition

Service charge definition

What does Service charge mean? A service charge is a variable payment made by a tenant, leaseholder or other occupier to a landlord, owner or management/factoring company to recover the cost of providing, maintaining, repairing, insuring and managing common parts and shared services in a multi‑occupied building or estate (residential or commercial). It is typically budgeted annually, demanded on account, and later reconciled by a balancing charge or credit. Apportionment is usually set by the lease or title (for example, a fixed percentage, floor area, rateable value or a “fair proportion”). Demands commonly include managing agent fees and contributions to reserve/sinking funds, and...

Service charges in Scottish commercial leases: disputes, lease interpretation, RICS Service Charge Standard, and remedies

Published by a LexisNexis Property Disputes expert

Practice notes

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.

Service charge disputes

Service charge arrangements frequently lead to disagreements between landlord and tenant. The principal reason for this is, quite simply, that, in essence and, in fact, the landlord indeed is...

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Gavin Deeprose

DLA Piper

Gavin is a Senior Professional Support Lawyer in DLA Piper's Litigation & Regulatory Group. He provides technical support to legal professionals within the Group across a diverse range of subject areas including property, commercial and regulatory disputes. He monitors, updates and trains lawyers and clients on relevant legal and regulatory developments, creates and maintains litigation and other styles for use within the Group and produces articles and client bulletins for publication on the firm's website and newspapers, journals and online platforms. He also works on global projects to enhance the quality of client service.Prior to becoming a professional support lawyer Gavin gained substantial experience as practitioner, working at two major Scottish firms. He is an experienced litigator specialising in commercial disputes, including property related claims, corporate debt recovery and repossessions, and insurance litigation, acting for many prominent companies and financial...

Web page updated on 22/05/2026

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