COVID-19 and Service Charges in Commercial Lease

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COVID-19 and Service Charges in Commercial Lease

Published 2 June 2020

Most landlords, like their tenants, do not have infinite resources. Landlords rely on the rent to meet their own obligations, but that does not include service charges.

Service charges are necessary to keep premises fit-for-purpose and operational and so are considered a basic cost of occupation. The services covered are essential benefits to tenants and usually include things like: air-conditioning and lift maintenance, cleaning of common parts and security. Landlords should not profit from service charges, but nor should they be expected to provide such services at a loss.

Where leases provide that cleaning should be carried out as often as is reasonably necessary, landlords may want to consider arguing that the circumstances merit extra cleaning services and that these services should be recoverable.

A sweeper clause may also apply, although such clauses are generally interpreted strictly and contra proferentem.

If other additional measures are needed to enable safe opening of premises (for example, added security through the common parts) then these may also be recovered, although may also be challenged.

Of course, tenants will be conscious to ensure that they are only required to pay a fair proportion of such costs and that any such services provided are reasonable.

Service charge provisions are often complicated and if in any doubt please contact Clare Hartley or Kai Ricciardiello for assistance.

Authors

Clare Hartley

Clare Hartley

Leeds

+44 (0)113 251 4913

Kai Ricciardiello

Kai Ricciardiello

Leeds

+44 (0)113 251 4886

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