05 December 2011
When it comes to service charges, renting commercial property is not always a straightforward process. Many occupiers are not satisfied with the level of services they receive in respect to service charge management.
Generally, the blame is directed at the non-binding nature of service charge management regulations. However, is that really the only problem?
Surely there are examples of services and products which are provided to a level beyond what is legally required? So what went wrong with service charges? One of the possible explanations is a simple inertia on the part of the occupiers, or continuous demand for services of any quality. On the other hand, one could argue that the so called bargaining power of buyers is significantly reduced when there is a rather limited number of better options in the market, or lack of competition in the industry. Either way, there would be no incentive for the property owner to make sure they go one step further than their closest competitors in complying with best practice.
Finally, another explanation may be that customer focused business culture is not a precondition in commercial property sector. This explanation does actually make a lot of sense if you look at the current range of commercial property owners prevailing in the UK market. A developer, a financial institution, a pension fund, or an individual could be the owner of the office building or the shopping centre. And that is where some differences can be observed. Each of the abovementioned parties has different business priorities which has an ultimate impact on their customer related strategy, if such exists to begin with… Simply put, some owners care about service delivery and that means you will get your service charge budget on time, with adequate level of information disclosure and in a user-friendly format. However, if you are less lucky with the owner of your rented property, the service charge documents you receive (if you do?) may be unclear, if not completely confusing.
The question is how to deal with this fragmented nature of property management sector and what is the most efficient way of changing the industry. Raising awareness of the issues has got to be the first step.
Anastasia Zatolokina
Industry Performance Analyst, Property Solutions