New Service Charge Code of Practice
The RICS has published the third edition of the code of practice for service charges in commercial property.
With poorly managed service charges a frequent cause of dispute between owners and occupiers, the RICS service charge code of practice has been developed with and endorsed by leading property bodies to improve standards. The code promotes consistency, fairness, transparency and best practice in the management and administration of commercial property service charges.
The code sets out clear best practice principles to surveyors, their clients, and managers of service charges. Its stated aims are;
To improve general standards and promote best practice, uniformity fairness and transparency
The ensure timely issue of budgets and year end certificates
To reduce the causes of disputes
To provide guidance to solicitors, their clients and managers of service charges
Following an industry summit, hosted by RICS, it was clear that there were areas of the Code that required greater clarity, in particular in relation to service charge accounting, environmental sustainability, sinking funds and fees. The revisions in the Code and an updated paper on sinking and reserve funds reflect the feedback received from the industry.
Since its launch in 2008 the code has set down a marker as to the standards of management required in commercial property and this new edition builds on that. The continued support from all the leading UK property bodies in producing the Code and their efforts in promoting it demonstrates the ongoing commitment of the entire property profession to continue to drive standards up.
This latest version of the code of practice is a response to industry feedback and consultation and also reflects discussions with other bodies involved in the service charge process, such as the ICAEW, and represents a continuation in the evolution of best practice. The aims, objectives and core principles remain unchanged but it is hoped that improved clarity and additional guidance, in respect of such issues as recommended best practice for disclosures and information that should be communicated to tenants, will be particularly welcomed.
Merrifields look to adopt the code where it is possible to do so.