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Turner Coulston Solicitors Newsletter: Issue 51st December 2008
Service Charge Caps for Commercial Tenants
A tenant taking premises within a building already in need of significant repairs will often seek to cap his contribution to the service charge so as to exclude the cost of carrying out those repairs.
In the recent case of Princes House Limited -v- Distinctive Clubs Limited a tenant taking a lease of part of a building was successful in negotiating a service charge cap for the first five years of its term. The cap was sought so as to exclude paying towards the cost of major roof repairs already required before it took its lease.
In the lease, the landlord covenanted to use all reasonable endeavours to repair and replace the roof but had still failed to do so by the expiry of the five year period during which the cap applied.
The landlord eventually carried out the repairs in the subsequent period and invoiced the tenant for its full share, ignoring the cap, which had expired.
The tenant refused to pay successfully arguing that the repairs should have been carried out during the five year period during which the cap applied. He was supported by the judge, who also expressed concerns that some landlords are failing to comply not only with the service charge code but also with the provisions of the lease relating to service charge. It is essential that tenants monitor service charge demands against the performance of the covenant made by the landlord in the lease.
Euan Temple.
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