SERVICE CHARGE AUDIT

Tenants very often need an independent audit to establish that the service charges they are paying are both in compliance with the terms of their lease and are fair and reasonable. This may be in response to specific proposals by a landlord or just as a result of concern about a high level of charges. Property Solutions can undertake a review of service charges paid and proposed to establish compliance and reasonableness. The level of review can be tailored to meet tenants requirements, ranging from desktop reviews to site visits and technical assessments. They can be undertaken for a single location or an entire portfolio.

WHAT DO PROPERTY SOLUTIONS DO?

Stage 1 Audit
This is usually undertaken on a desk top basis

• Receive service charge certificates budgets and invoices.
• Check documents for errors.
• Analyse certificates and budgets.
• Compare costs against benchmarks.
• Compare costs against payments made.
• Consider current rate of on account collection.
• Review lease and determine liability for charges demanded.
• Consider apportionment issues.
• Consider economics of achieving savings.
• Provide a concise report summarising findings on a building by building basis.

Stage 1 Output
The output will include a summary of Property Solutions' findings and will provide one of three recommendations:

1. Cost levels and apportionment do not warrant further action.
2. Proceed to a second stage audit.
3. There is clear evidence of excess costs and or apportionment which warrants proceeding to consultancy.

Stage 2 Audit
A second stage audit will be necessary where there are matters which require clarification and the potential for service charge savings cannot be determined by a desktop analysis of the data. Further actions may include:

• Correspondence with landlords or managing agents to obtain clarification on points of concern.
• To seek additional information which clients have been unable to supply.
• To undertake a site visit to make a general or specific assessment.
• To provide a report summarising findings and recommendations.

PARTNERSHIP

Property Solutions will work closely with you in setting up and running the service to make sure your requirements are met.

Property Solutions will agree with you:

• Methodology for access to information.
• Communication points and processes.
• Reporting requirements.

SAVINGS

The Service Charge Audit process may achieve savings through the identification of errors made by landlords or their agents. Depending on the nature of the dispute, these negotiations may be handled by the experts in Property Solutions Service Charge Consultancy or Building Services teams.

FEES

These are negotiated with each client to reflect the level of service required. Service Charge Audit can be either a retained fee, set fee per location or on a time charge basis. Consultancy can be either a time charge or based on a percentage of any savings achieved.

BENEFITS

• Provides a one off assessment and report of service charges issues at locations included in the audit.
• It provides an opportunity to identify and challenge costs that do not appear to be fair and reasonable, especially in the case of extraordinary costs.
• It provides the opportunity to challenge costs, which do not appear to be in compliance with the terms of the lease.
• Service charge issues will be identified which will assist with asset management and strategic decision making.
• It provides an assessment of processes and the existing management of overall service charge costs.

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