The RICS has issued a draft guidance note (Click here to view) aimed at those involved in the management of mixed use developments for use in connection with the setting, apportionment and recovery of service charges arising out of mixed use developments. The draft guidance once finalised and issued will apply to properties in England and Wales. The guidance note is just being finalised and is currently intended to be issued at the end of September.
Having reviewed the draft guidance notes, I can advise you that this will be a highly useful tool to you as both a manager of mixed used developments, (i.e. residential above commercial) and also as leaseholder of residential accommodation within a larger mixed use development, i.e. where the mixed use arises from commercial, retail, leisure and office use on an Estate.
The guidance highlights the differences between the rules which apply for purely commercial property and the rules that apply purely to residential properties. It then considers the differences between the statutory regimes which apply to both commercial properties and residential properties and also indicates the different objectives which the owners of commercial property have in comparison to those owners of residential property.
I can see that this could be used by you in the following scenarios:-
- Where you are receiving for the first time a proposed service charge estimate for approval and agreement from your landlord where you will be owning residential property within a mixed use development. It will allow you to check whether or not sufficient information has been provided to you in respect of the service charges to be charged to you and whether the apportionments have been set correctly.
- In the setting up of new service charges for mixed use developments, the guidance notes will assist you in knowing exactly what information is expected of you by your residents and what documentation and information you will need to have available to either consult with residents on, or to have available to clearly demonstrate that you have complied with the obligations placed on you by the various codes of practice and by the statutory regime.
As a result of the above, you may wish to make changes in respect of your procedures for setting approving and challenging service charges which apply to your properties. I would also draw your attention to the particular section dealing with combined heat and power and district heating systems at guidance note 10.1.
The clarity given in the guidance note provides focus on what can and can not be charged as a service charge and what considerations the Leasehold Valuation Tribunal will take on certain issues will be a valuable tool.
If you would like to have a general discussion regarding the issues raised by the guidance notes or implementing this into your standard procedures in dealing with the setting of service charges or the review of service charge provisions in your legal documentation and the employment of any managing agents for mixed use developments, please do not hesitate to contact me:
020 7634 8768
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This briefing is written as a general guide only. It is not intended to contain definitive legal advice which should be sought as appropriate in relation to any particular matter.