A report that presents analysis of almost £400m of UK commercial office service charge expenditure over the past four years, found accounting and compliance practices are still falling short of the mark.
On average, occupiers pay just above £9.00 per square foot in London and £5.20 per square foot in the rest of the UK with the most expensive services listed as security, mechanical & electrical services and electricity.
The new report found many service charge costs increased above the level of the UK inflation despite the fact that some services have become less expensive.
The analysis entitled: “Service Charge Operating Report (SCOR) for Offices 2013” from service charge consultancy, Property Solutions found variances between service charge budgets and certificates of expenditure for the same service charge year with the data showing that more than half of the budgets provided overestimated costs, with the difference exceeding 20% in one out of five cases – an important observation in light of the fact that service charges are collected in advance based on the budget issued by the managing party.
Furthermore, the report found accounting practices are still falling far short of official guidance introduced in the RICS Code 2011. The research for the report found thirty-four per cent of documents showed no evidence of any certification and only nine per cent mentioned the basis of which service charge accounts were prepared.
Commenting on the report, a spokesperson from Property Solutions, said:
“The main area still requiring significant improvement is on the issue of the preparation of service charge accounts and the financial management and data that is published as without accurate management information it can be very difficult to assess how effective building management systems are.”