When you rent a unit in a building you share with other occupiers (a floor in an office block, a shop in a parade, a unit on an estate), the rent isn’t the whole story. On top of it sits the commercial lease service charge: your contribution to the cost of running and maintaining the parts of the building everyone uses. It’s a normal and reasonable thing to pay. Tenants often get caught out here. A service charge can be far less predictable than rent. A poorly drafted clause can expose you to costs you didn’t see coming.
What A Commercial Lease Service Charge Typically Covers
A commercial lease service charge funds the upkeep of the shared, or common, parts of the building and the services that benefit all the occupiers. Depending on the building, that can include:
- Maintenance and cleaning of common areas: entrances, corridors, lifts, stairwells, car parks.
- Building insurance for the structure (often recharged separately but related).
- Repairs and maintenance to the roof, structure, and shared systems like heating or air conditioning.
- Lighting and energy for the common parts.
- Security, where there is any.
- The managing agent’s fees for running all of the above.
In a well-managed building, you spend this money well. It keeps the place in good order, which protects your business too. The real question is how the landlord calculates the charge, and what limits apply to it.
How Your Share Is Worked Out
You don’t pay the whole cost: you pay a proportion, your share of the total. That apportionment is usually based on the floor area you occupy relative to the building, though some leases use a fixed percentage. Check how yours is calculated, and check it’s fair. If the landlord hasn’t let the whole building, you don’t want to cover the empty units’ share of the costs.
What to Watch For with a Commercial Lease Service Charge
A few things separate a fair service charge from a painful one:
- A cap: a ceiling on how much the service charge can rise year to year gives you certainty and protects against a sudden jump. Worth asking for.
- Sinking and reserve funds: money collected in advance for big future works (a new roof, say). Reasonable in principle, but check the landlord ring-fences it, and that you won’t fund works you’ll never benefit from on a short lease.
- Major works: a big one-off project can land a large bill. Ask what’s planned.
- Management fees: these should be reasonable and clearly stated, not an open-ended percentage.
- Historic shortfalls: make sure the landlord isn’t asking you to cover costs from before your lease began.
There’s a Code for This
A professional code of practice, the RICS code, covers commercial service charges. It sets standards for how landlords should manage them: transparency, fairness, proper accounting, and consultation on big spends. A landlord or managing agent following it should be able to show you a clear breakdown of where the money goes. If you can’t get a straight answer on what you’re paying for, that’s a flag.
The current version, RICS’s Service Charges in Commercial Property professional standard, took effect from 31 December 2025 and sets mandatory obligations for RICS-regulated firms managing commercial service charges.
Get the Estimate Up Front
Before you commit, ask for the commercial lease service charge budget and the last year or two of actual figures. The rent might look affordable, but the rent plus a heavy, uncapped service charge is a different proposition. Knowing the real all-in cost is the only way to compare premises properly.
Frequently Asked Questions
The upkeep of the building’s shared parts and services: cleaning and maintaining common areas, repairs to the roof and structure, shared systems like heating, lighting for common parts, any security, and the managing agent’s fees.
Usually by the floor area you occupy relative to the building, though some leases use a fixed percentage. Check the method, and make sure you’re not covering the share of empty units if the landlord hasn’t let the whole building.
Yes, if you negotiate it. A cap sets a ceiling on year-to-year rises, which gives you certainty and protection against sudden jumps. It’s worth asking for.
Money collected from tenants in advance to pay for big future works, such as a new roof. Reasonable in principle, but check the landlord ring-fences it, and that you won’t fund works you’ll never benefit from on a short lease.
There’s a professional code of practice, the RICS code, setting standards for transparency, fairness, proper accounting, and consultation on major spends. A landlord or agent following it should be able to show a clear breakdown of where the money goes.
Aqqord covers office, retail, and industrial leases with terms set out clearly so you can see the full picture before you commit, rather than the headline rent alone. Set your terms and preview a full draft for free at aqqord.com, with nothing to pay until both parties sign.
