commercial service charge + other problems

[bigegg]

I've recently moved out of a commercial premises, which I held on a 4-week "tenancy at will" - I have delayed complaints against the landlord until I moved out so I didn't jeopardise my business.

 

Charges comprised £170 rent plus £80 service charge ( approx per week).

This is for a shop unit which is part of a larger building with about 20 other tenants - it does not include any charge for heating or lighting, but (presumably) includes rubbish removal and building insurance.

 

I have had various problems with the landlord (who is a local council)

including, but not limited to:

no vat invoices or receipts given (I might have mentioned this to the HMRC "report a crook" hotline )

complaints against members of building staff not being handled correctly

 

however, main question for the moment [1] is:

Do I have a legal right to a breakdown of how the service charge is spent (for a commercial property) - and can I sue for reimbursement if it hasn't been spent? seems to me that 80k (4K x 20 tenants) a year for insurance+a rubbish skip+management/admin is heck of a lot of money!

 

property is in city centre of a mid-sized town in West Yorkshire

 

[1] I have sent SAR to the council, thread will be updated as more questions come to light.

Edited February 25, 2012 by bigegg

[andydd]

Hi there.

 

The landlord & Tenant Act S21 gives you a right to request a suammry/breakdown of service charge costs, S22 gives you a further right to visit their office to inspect invoices, etc.

 

Im not 100% if/how they apply to commercial premises though...and sometimes the rules dont appoly to local authorities.

 

There is a good site > Lease Advisory Service > http://www.lease-advice.org/ you can phone/mail them for free advice.

 

The LVT (Leasehold Valuation Tribunal) is a court that deals with such matters, but again, you need to check it applies to commercial properties

Andy

[Ed999]

My advice is applicable only if the rented premises are in England, and only if you were granted a tenancy (under which you had exclusive use of the premises, which were not shared with another tenant nor with the landlord) and you were over 18 years of age when the tenancy was granted.

 

 

Consult a Solicitor for advice, it is a complex area of law. Or try the Commercial Property Forum -

 

http://www.landlordzone.co.uk/forums/forumdisplay.php?8-Commercial-Property-Questions

 

 

A business lease can be invalid in some circumstances, for example if it's granted in breach of a prohibition on sub-letting contained in a superior lease. Tenancies at will are commonly used in an attempt to get round that type of prohibition.

 

If you have been granted exclusive occupation of business premises, you could have a tenancy; and if it has not been excluded from the protection of the Landlord and Tenant Act security of tenure, by a prior agreement, then you could potentially have enforceable legal rights under that tenancy; but only a Solicitor can enforce them, because it is a complex and technical area of law.

[Ed999]

The landlord & Tenant Act S21 gives you a right to request a suammry/breakdown of service charge costs, S22 gives you a further right to visit their office to inspect invoices, etc.

 

 

Section 21 of the Landlord and Tenant Act 1985 applies to residential leases only. See section 18(1) of the Act:

 

http://www.legislation.gov.uk/ukpga/1985/70/section/18

 

 

Landlord and Tenant Act 1985 -

 

Landlord and Tenant Act 1985

[andydd]

Aha..thought that might be the case..scrub most of what I said then !

[bigegg]

Section 21 of the Landlord and Tenant Act 1985 applies to residential leases only. See section 18(1) of the Act:

 

http://www.legislation.gov.uk/ukpga/1985/70/section/18

 

 

Landlord and Tenant Act 1985 -

 

Landlord and Tenant Act 1985

 

and does not apply to local authorities (s.26)

[andydd]

and does not apply to local authorities (s.26)

 

Although if it were residential and a LA then the FOI route may be open to you.

[bigegg]

Could I not use FOI for a commercial property?

 

However.

Is there any statutes/case law which says all the service charges must be spent or refunded, rather than just being extra profit for the LL?

[Commercial service charge]

I've recently moved out of a commercial premises, which I held on a 4-week "tenancy at will" - I have delayed complaints against the landlord until I moved out so I didn't jeopardise my business.

 

Charges comprised £170 rent plus £80 service charge ( approx per week).

This is for a shop unit which is part of a larger building with about 20 other tenants - it does not include any charge for heating or lighting, but (presumably) includes rubbish removal and building insurance.

 

I have had various problems with the landlord (who is a local council)

including, but not limited to:

no vat invoices or receipts given (I might have mentioned this to the HMRC "report a crook" hotline )

complaints against members of building staff not being handled correctly

 

however, main question for the moment [1] is:

Do I have a legal right to a breakdown of how the service charge is spent (for a commercial property) - and can I sue for reimbursement if it hasn't been spent? seems to me that 80k (4K x 20 tenants) a year for insurance+a rubbish skip+management/admin is heck of a lot of money!

 

property is in city centre of a mid-sized town in West Yorkshire

 

[1] I have sent SAR to the council, thread will be updated as more questions come to light.

 

Common practice is not to charge tenants under tenancy-at-will service rent ( service charges). Main document in commercial rent is lease/tenancy agreement. Nevertheless you have a right to view all invoices landlord or managing agent paid in respect of property maintenance. If you have further queries please Message me. You can find me on twitter [EDIT].

 

Stefan

Edited May 1, 2012 by ims21
CAG does not allow personal twitter links

[Ricardino]

There may not be any VAT applicable to the commercial rent charges. As for the 4k that works out at £80 a week so it's not extortionate but Id imagine would also cover

Utilities of common parts like light and heat in corridors etc. But these have to be disclosed if you request how hey arrive at their figures.

Commercial leases are such a minefield even a the best o times!

 

Ric

[ims21]

Hi bigegg

 

I am sure you will know but just in case....it is not wise to provide information to unknown people via messaging. For your own security

[bigegg]

There may not be any VAT applicable to the commercial rent charges. As for the 4k that works out at £80 a week so it's not extortionate but Id imagine would also cover

Utilities of common parts like light and heat in corridors etc. But these have to be disclosed if you request how hey arrive at their figures.

Commercial leases are such a minefield even a the best o times!

 

Ric

 

If I actually shared any utilities, I wouldn't mind.

But this was externally facing unit, which didn't share anything except a roof and a communal loading area, and a skip.

My utilities (and rates) were extra.

 

I have no right to disclosure for a commercial lease, with a L.A. unfortunately, so have given that up as a loss (pending any further info).

 

VAT was DEFINITELY charged on the rent AND service charge (according to the lease).

 

Any way:

Update to the SAR saga:

 

After receiving half of the data I required, I made a formal complaint, and received a *little* bit more info - including a wad of (badly) photocopied "receipts" which have "NOT A RECEIPT" printed across them, and none of the prescribed information which would make them valid as VAT invoices (name and address of LA, my name and address, date of supply, the VAT rate, etc, etc, etc) -

http://www.legislation.gov.uk/uksi/1995/2518/regulation/14/made

 

says what it should have, and all these have is the LA's name, and VAT number (in some cases), my shop number, the rent, service charge and the total VAT added.

Any arrears amount (where applicable) is given as a VAT-inclusive (I assume) total.

Then a hand written line with the amount paid.

 

Any week I didn't pay (I usually paid fortnightly, so every receipt would have one week's arrears), I wouldn't receive anything.

 

Most interesting, they have confirmed *in writing* that no statements of account are available before april 2010, and the first balance shows arrears of 1.5K, so that's gonna make a difference to how much they can claim from me.

 

The letter also confirms that the LA "does not issue VAT invoices" - which I think might just drop them in it with the Vat Man.

 

And lastly, I had a word with my accountant, and basically if I have the LA's VAT number, and the lease agreement, I *should* be covered for reclaiming the VAT back.

 

So long story short -

 

I'm in the clear.

LA is in the doo-doo.

 

Just need to work out the best way to maximise the benefits for me now.