This cheatsheet includes practical tips to understand key clauses and avoid disputes in leasing agreements.<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n If you are part of a commercial lease, the lease agreement<\/a> may contain a provision that details the tenant must pay a property service charge. This charge is in addition to the property rent. <\/p>\n\n\n\n The property service charge<\/a> covers common services by the landlord as part of the lease. It will typically occur when the lease is for commercial premises within a larger building with several business premises. For example, a large commercial building with multiple offices inside, each leased by different businesses. In this instance, the business premises may share areas such as:<\/p>\n\n\n\n The service charge will assist the landlord in maintaining these areas<\/a> and allow the costs to be shared between the individual business tenants. For example, the cost may cover the:<\/p>\n\n\n\n The property service charge does not cover costs for all common areas, such as a one-off renovation or other significant expenses. Although similar, sinking and receiving funds are not the same. Therefore, you must be clear on which, if any, the commercial lease will contain. We explain each fund below.<\/p>\n\n\n\n Sinking funds differ from the property service charge and cover substantial repair costs. Sinking funds cover repair costs a landlord and tenant believe will likely arise during the lease term. They will usually refer to repairs for expensive and possibly large equipment, for example:<\/p>\n\n\n\n A landlord should speak to their accountant if their commercial lease contains a sinking fund. There are different methods to set up a sinking fund and, therefore, a range of tax implications.<\/p>\n<\/div>\n\n\n\n A reserve fund in a commercial lease is a fund that allows a landlord to meet the costs of likely future maintenance of the common areas of the commercial property. This may include, for example:<\/p>\n\n\n\n The reason for a reserve fund in a commercial lease is to ensure that the yearly commercial property service charge is fair. Likewise, an allocated reserve fund ensures the property service charge does not vary too much each year. Reserve funds also ensure that a commercial tenant does not suddenly have to make a large payment in the lease.<\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nWhat is a Service Charge?<\/h2>\n\n\n\n
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Sinking Funds and Reserve Funds<\/h2>\n\n\n\n
What are Sinking Funds?<\/h3>\n\n\n\n
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What are Reserve Funds?<\/h3>\n\n\n\n
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\n Cheatsheet for UK Leasing Terms<\/div>\n
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