Service charges in a business lease: what the lease says and the RICS standard

Do the statutory service charge rules apply to a business tenant?

The definition in section 18(1) of the Landlord and Tenant Act 1985 refers to an amount payable “by a tenant of a dwelling” as part of or in addition to the rent, and varying with “relevant costs”. A business tenant’s charge, on its own, does not fall within that definition, so the amount and the terms are set mainly by the lease.

Check a mixed letting separately. A “dwelling” is a building or part of a building occupied or intended to be occupied as a separate dwelling (section 38), so if your letting includes one, for example a flat above a shop, check whether the statutory provisions apply: the definition turns on whether the amount is payable by a tenant of a dwelling (section 18(1)). A solicitor can confirm which rules apply to your letting.

Which RICS standard applies, and from when?

The RICS professional standard on service charges in commercial property is the reference point for how budgets and certificates are prepared. The current edition is the 2nd edition, effective from 31 December 2025 (RICS standard, service charges in commercial property).

What should the lease say about the service charge?

Because the statutory definition does not reach a business tenancy, the lease is the document to check. Read the service charge clause for the services covered, how the budget is set and when the year-end certificate is due. The RICS standard points to timely budgets and year-end certificates as the aim of good practice (RICS status page).

What if a tenant disputes a service charge?

The RICS standard says that where there are disputes it provides guidance on resolution (RICS status page). It sets mandatory requirements for RICS members and RICS-regulated firms (RICS status page), so ask whether the landlord’s managing agent is bound by it. Check the service charge clause in your lease before you dispute a sum, and take advice from a solicitor on the wording.