RICS’ updated service charge code – a step forward, but is it enough?
Posted on: 24 July, 2025
By Tony Wallace
Lecturer, BSc (Hons) Real Estate Management and MSc Real Estate
The second edition of the RICS Professional Standard on service charges in commercial property promises greater transparency and a nod to sustainability. University of the Built Environment lecturer Tony Wallace argues that, without robust enforcement and mandated environmental targets, it might fall short of its potential.
The long-awaited second edition of the RICS Professional Standard on Service Charges in Commercial Property, published in June 2025 and effective from 31 December 2025, arrives at a time when the commercial property sector is under more scrutiny than ever. While the update builds on the foundations laid by the 2018 edition, we must ask: why was this update necessary, and has it gone far enough?
‘A source of friction’
In truth, service charges have long been a source of friction between landlords and occupiers. Lack of transparency, vague budgeting, delayed reconciliations, and disproportionate costs have bred mistrust. Occupiers, especially SMEs and retailers, often feel trapped in a system where they have little insight into what they’re paying for – or whether it’s fair. The first edition of the code in 2018 was a necessary starting point, but the market has evolved, and expectations have shifted.
The 2025 update introduces some welcome changes: stronger emphasis on quarterly budget updates, benchmarking of costs, and mandatory digital access to service charge data. It also reflects the times by embedding ESG principles – a long overdue move. Landlords are now expected to factor sustainability into operational decisions and report accordingly.
Limited impact
But will it change anything? Possibly. Greater frequency and visibility of reporting may help occupiers challenge excessive costs earlier. The codified dispute resolution process also adds structure where there was ambiguity. However, without stronger enforcement mechanisms – particularly for landlords who continue to disregard best practice – some might argue the impact will be limited.
Moreover, while ESG inclusion is progressive, it stops short of setting minimum environmental standards. Sustainability is encouraged but not mandated. Similarly, there’s no real penalty for non-compliance, meaning some landlords could still pay lip service to the standards without truly changing their approach.
In conclusion, this second edition is a measured and necessary evolution. It reflects the realities of a more transparent, digital, and sustainability-conscious industry. But to truly rebuild trust around service charges, greater accountability, enforceability, and perhaps regulatory pressure may still be needed. The foundations are stronger – but the structure isn’t finished yet.
