Jurisdiction(s):
United Kingdom

Related legal acts

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...

Scottish commercial leases: service charge, common parts, services, exclusions, reserve and sinking funds, and the RICS Service Charge Standard

Published by a LexisNexis Property expert

Practice notes

This Practice Note examines how Service charges are typically imposed on occupiers of multi-let buildings by commercial Landlords in Scotland. It does not address disagreements about service charges or common parts; for that, see Practice Note: Service charge Disputes relating to commercial property—Scotland.

Service charge

A service charge is a sum a Tenant may have to pay under a commercial lease in exchange for the landlord undertaking works to shared areas of the property and, in some instances, supplying services. The lease must expressly provide for any service charge. It should also explain the basis for calculating each tenant’s contribution within the building and the timing of payments.

There are several ways to divide service charge liabilities between tenants, with the most suitable approach depending on the circumstances. Common methods include:

Floor area—the method most frequently adopted
Fixed percentage
Rateable value

During lease negotiations, there is often a balance to strike between a tenant’s need for certainty over the amount payable, on the one hand...

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Kenneth S Gerber

Mitchells Roberton

Ken joined Mitchells Roberton in 2019. He was previously a partner for 12 years at Anderson Strathern, and before that he was a partner at Kidstons.Ken handles landlord and tenant law, site assembly, property development, property financing, property purchase and sale and the property aspects of corporate transactions.He is accredited by the Law Society of Scotland as a specialist in commercial leasing law. He regularly speaks on a range of commercial property subjects at conferences for MBL Seminars, as well as for other providers, and has presented online lectures for The Law Society of Scotland and University of Glasgow. Kenneth wrote the course on commercial conveyancing for the postgraduate Law Diploma at Glasgow University, and is senior tutor on that course. He also regularly provides specialist legal opinions to other firms on commercial lease matters....

Web page updated on 22/05/2026

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