Commercial Service Charge Management
Shepherd Commercial, a leading asset management firm with offices in Birmingham and Solihull provide commercial service charge management services to the entire Midlands.
As commercial service charge managers, we ensure schedules are budgeted, collected and spent correctly on behalf of both landlord and tenants.
Providing transparent, RICS compliant service charge budgets to clients of all asset types across the Midlands, Shepherd Commercial conduct day to day management and reconciliation through our multi-disciplinary teams in Birmingham and Solihull.
With over 200 years combined experience across the sector, we deliver data-driven, precise commercial service charge management solutions to both private and institutional clients alike.
Service Charge Management
Service charge management is the process of planning, collecting and administering the costs required to operate and maintain common areas within multi-let commercial properties.
We’ve prepared and delivered a curated blog to answer all questions surrounding service charges.
What does commercial service charge management do?
Core Responsibilities:
Annual budgets are prepared and issued to tenants
Service charge demands are collected on time
Contractors are procured competitively
Building maintenance complies with regulations
Invoices and VAT are processed correctly
Accounts are reconciled annually with full transparency
Tenants receive clear communication and fair apportionment
What costs are included in a commercial service charge?
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Cleaning of common areas
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Security and CCTV
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Utilities and lighting to shared areas
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Landscaping and grounds maintenance
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Fire, health & safety compliance
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Lift maintenance
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Insurance (where permitted by the lease)
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Management fee
All costs must be consistent with the terms of the lease and reflect reasonable, proportionate expenditure.
Costs unrelated to building operations such as letting fees and landlord asset upgrades are not included within a service charge budget.
How are commercial service charges budgeted and how do reconciliation work?
The Annual Process:
Budget Issued to Tenants
Quarterly or Monthly Demands Raised
Costs Incurred and Paid to Contractors
Year-End Reconciliation Prepared
Overspend or Under-Spend Adjusted
Audited Accounts Provided Where Required
If a building has been opted to tax, both rent and service charges are subject to VAT. VAT collected must be processed through the landlord or management company’s VAT return, with recoverable input VAT offset against building expenditure.
Why appoint a RICS-Regulated manager?
We charge a management fee that is clearly stated within the service charge budget. This fee covers administration, tendering, inspections, reconciliations and professional management, and is usually expressed as a percentage of annual expenditure (typically 5%–10% depending on asset complexity).
A RICS-regulated firm ensures compliance, transparency and fiduciary handling of client money. This protects landlords and prevents disputes with tenants.
