PM (Property Managers) Forum

Insights from the Property Managers Forum: Addressing Industry Challenges Together

Workman, Cheapside, London

The first quarterly Remit Consulting PM (Property Managers) Forum of 2025, kindly hosted by Workman, provided a deep dive into Service Charges in Commercial Property. The event featured expert discussions led by Andrew Salmon from Websters and Andrew Morley from Bellrock, focusing on the consultation review for the Draft 2nd Edition of the RICS Professional Standard.

Key Discussions and Takeaways

Transparency and Mandatory Requirements

Andrew Salmon from Websters emphasised the importance of transparency for tenants (previously termed ‘occupiers’ in prior standards). The draft Professional Standards outline eight mandatory requirements for service charge management, including:

  • All expenditure recovery being sought must be in accordance with lease terms

  • Managers must only seek recovery of 100% maximum of cost-of-service provision

  • Managers must issue:

    • Budgets to tenants at least one month prior to service charge year start

    • Approved set of service charge year-end accounts within four months of service charge end

    • IF the timescales cannot be met, full explanations must be provided

  • Managers must provide a service charge apportionment matrix with the budget and reconciliation to all tenants.

  • All service charge monies (including reserve and sinking funds) must be held in one or more discrete bank accounts

  • Interest earned on monies must be credited back to the service charge

  • Occupier advisers must inform their clients that they are only entitled to withhold payment of service charge in the case of a mathematical or computational error

  • Managers must, post-dispute resolution, correct any service charge error without delay.

He also raised concerns regarding GDPR compliance, as not all tenants are corporate entities and may wish for their data to remain confidential. Additionally, during the transition phase between the old and new Professional Standards, there will be instances where two sets of accounts are held.

Balance Sheets and Service Charge Management

Andrew Morley from Bellrock highlighted the potential benefits of balance sheets in service charge accounting but questioned whether the industry is ready. The draft code recommends that accounts prepared on an accrual basis should include a balance sheet or cash reconciliation with the final statement. However, attendees expressed concerns that this requirement may be too costly for smaller buildings with low service charge values.

Another significant discussion point was management fees. The new standards propose a fixed percentage for fees, but the industry lacks a clear method for measuring total management costs, including procurement fees. Some members noted that fees recovered for managing industrial estates are often insufficient, with one example illustrating that managing a small site with a £10,000 annual service charge could require the managing agent to spend half that amount on administration.

A key takeaway was that lease agreements remain paramount—many leases are poorly drafted, lack clarity, and offer minimal guidance on apportionment, leaving room for interpretation and disputes.

Addressing Compliance and Implementation

RICS is still developing processes to ensure remedies for landlords if tenants do not comply with the new standards, but there will be a reporting mechanism to encourage better compliance among managing agents. The RICS arbitration service must remain impartial and fair, as some complaints may be made in bad faith. While breaches of these standards do not carry legal consequences, RICS members failing to meet professional standards could face penalties such as cautions, fixed fines, or, in severe cases, expulsion from RICS membership.

Internal audits and compliance checks will likely flag non-compliance, with reputational damage being the most significant risk for property managers and agencies.

Discussion Points from Forum Members

The forum generated mixed reactions regarding the draft standards. Some members welcomed the changes, while others raised concerns about potential conflicts with service charge consultants who might adopt an adversarial rather than collaborative approach with managing agents.

The reintroduction of the term ‘Tenant’ instead of ‘Occupier’ was debated, with some members seeing it as a step backward. Additionally, some attendees believed that ‘Black’s case’ had been misinterpreted within the new standards.

Another point raised was the misconception that all occupancy costs should be borne by tenants. Some property managers highlighted that lease agreements vary, with some tenants exempt from certain service charge payments based on pre-negotiated terms.

A key recommendation in the draft standards is that a “definitive timescale” should be agreed upon with the outgoing agent when transitioning management contracts to ensure a smooth handover.

Next Steps

The final version of the RICS Standards is expected to be published in Summer 2025, with implementation anticipated around six months later, meaning March 2026 year-ends would likely be the first to follow the new guidelines

For further details about the Property Managers Forum or future sessions, please contact: elijah.lewis@remitconsulting.com.

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