Service charges are where landlord-tenant relationships quietly succeed or fail. Done well, they fund a well-run building and are barely noticed. Done poorly, they leak value and breed disputes. Most of the damage comes from a handful of recurring errors.
1. Recovering costs the lease doesn’t permit
The lease defines what can be recovered. Charging for items outside that definition — however reasonable they seem — exposes the landlord to challenge and clawback. A lease audit starts by abstracting exactly what each lease allows.
2. Apportionment that doesn’t reconcile
When the sum of tenants’ shares doesn’t add up to 100% — or adds up to more — someone is being overcharged and someone undercharged. Both are problems. Clean apportionment schedules are the foundation of a defensible service charge.
3. Budget-to-actual drift
Charging on estimates and never reconciling to actual expenditure erodes trust and stores up large year-end adjustments. Transparent reconciliation keeps everyone aligned.
- Reconcile estimates to actuals every year, without exception.
- Share the workings, not just the bottom line.
- Flag material variances early rather than at year-end.
4. Missed sinking-fund discipline
Major works that arrive without a reserve to fund them produce sudden, contentious demands. A properly maintained sinking fund smooths this and signals competent management.
5. No audit trail
If you cannot evidence a cost, you cannot reliably recover it. Documentation is not bureaucracy — it is the difference between a recoverable charge and a write-off.
Most service-charge value is lost not to fraud, but to drift — small, uncorrected errors compounding year after year.
What a lease audit delivers
A lease abstraction and obligations matrix, a full reconciliation, and a clear recovery position — turning a source of friction into a well-run, trusted process.