Service charges accounting in focus

ACCOUNTING FOR services charges have been highlighted in a new code of practice by the Royal Institution of Chartered Surveyors.

The report came out shortly after a paper entitled Services charges within the UK office market: evidence on accounting practice, compliance and disclosure, written by two academics from Kingston University.

Both pieces of work reflect concern that has been mounting over unregulated accounting for service charges, which critics say can lead to conflict between landlords and tenants, as well as confusion about the use and purpose of the supplementary fee.

The total annual value of services charges in England and Wales is estimated to be around £4bn, and some experts have questioned whether the Rics code will be enough to resolve the issue. However, its authors say the most recent version is considerably strengthened and comes after significant industry consultation, meaning adherence and efficacy should be high.

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Fiona Westwood of Smith and Williamson.