building lease/ service charge quick question
Discussion
I'm currently in negotiation with our potential new landlords solicitor with regard to our new building lease.
We are aware that there is a service charge on the property which is fine however nearly 50% of this charge is a charge from the estate agents.
I would have thought that they take a % of the rental and therefore think it is unfair that their fee be applied via the service charge...
Can anyone tell me what is normal...?
TIA
D
We are aware that there is a service charge on the property which is fine however nearly 50% of this charge is a charge from the estate agents.
I would have thought that they take a % of the rental and therefore think it is unfair that their fee be applied via the service charge...
Can anyone tell me what is normal...?
TIA
D
The % they get off of the rental is for acting as a rent collection agent.
The fee they charge for the Service charge management is for dealing with all day to day aspects of the management dependant on the value of the service charge that could be anything from a fixed annual fee to a % of the expenditure either way yes its fairly normal for the managing agents to charge a fee.
The fee they charge for the Service charge management is for dealing with all day to day aspects of the management dependant on the value of the service charge that could be anything from a fixed annual fee to a % of the expenditure either way yes its fairly normal for the managing agents to charge a fee.
Are you getting legal advice on this? There are lots of traps for the unwaring in comm prop leases!!
As said it's probably the managing agents charge that your seeing, you should check what the service charge provisions allow them to charge for - for instance do you really want to be paying for the cost of the agents finding a new tenant or is that something that the Landlord should be picking up? My opinion on that varies depending on whether I'm acting for a Landlord or a Tenant!!
Be very careful if you're acting for youself your can end up with some pretty huge liabilities without realising it....
As said it's probably the managing agents charge that your seeing, you should check what the service charge provisions allow them to charge for - for instance do you really want to be paying for the cost of the agents finding a new tenant or is that something that the Landlord should be picking up? My opinion on that varies depending on whether I'm acting for a Landlord or a Tenant!!
Be very careful if you're acting for youself your can end up with some pretty huge liabilities without realising it....
I can back up everything Piglet said
PLEASE see a specialist solicitor - there are lots of us around, especially on PH
There is no "standard" agents fee as such but common practice is for them to be capped at 10 or 15% of the remainder of the service charge budget and to exclude fees for collection of rent, dealing with new lettings or anything else which is really part of the landlord's business of managing the property. Although having said that collection of rent tends to be done at the same time as collection of service charge so in reality it adds very little to the overall cost and nobody really makes a big issue over it.
The problem is that for smaller properties the service charge may not be big enough to interest an agent if they are only getting 10% of the budget as payment so the proportion may have to be higher
Service charge apart there are so many traps in commercial leases that nobody without specialist knowledge should be negotiating the lease itself. An equivalent car analogy would be trying to service a Veyron on your front drive.
PLEASE see a specialist solicitor - there are lots of us around, especially on PH
There is no "standard" agents fee as such but common practice is for them to be capped at 10 or 15% of the remainder of the service charge budget and to exclude fees for collection of rent, dealing with new lettings or anything else which is really part of the landlord's business of managing the property. Although having said that collection of rent tends to be done at the same time as collection of service charge so in reality it adds very little to the overall cost and nobody really makes a big issue over it.
The problem is that for smaller properties the service charge may not be big enough to interest an agent if they are only getting 10% of the budget as payment so the proportion may have to be higher
Service charge apart there are so many traps in commercial leases that nobody without specialist knowledge should be negotiating the lease itself. An equivalent car analogy would be trying to service a Veyron on your front drive.
billsnemesis said:
lots of things that make sense
I do intend to get proper legal advice and have already had a conversation with our usual chap about this. However the bits I'm talking about now are things which have appeared since we agreed terms so I want to get these sorted first (the property agent is proving to be utterly rubbish).
Of course if anyone on here is in cambridge or will be in central london on tuesday or wednesday then I'll buy lunch if you want to cast a beady eye over it all.
Right I have to go now there is a quad turbo W16 engine in the kitchen that needs an oil change
Thanks for everyones help so far.
Gassing Station | Business | Top of Page | What's New | My Stuff