Updated RICS service charge code: Progress made, but is it sufficient?
The Royal Institution of Chartered Surveyors (RICS) has announced an update to its Professional Standard on Service Charges in Commercial Property, effective from 31 December 2025. The revised standard introduces a dedicated Environmental, Social, and Governance (ESG) section, aiming to provide greater transparency and address longstanding issues that have led to mistrust between landlords and occupiers.
The new edition places a stronger emphasis on quarterly budget updates, benchmarking of costs, and mandatory digital access to service charge data. It also incorporates ESG principles, requiring landlords to factor sustainability into operational decisions and report accordingly.
However, experts argue that the positive effect of these sustainability provisions depends heavily on robust enforcement and mandatory environmental targets. Without such mechanisms, landlords may not consistently apply or prioritize environmental objectives, reducing transparency and fairness in service charge management.
The updated standard aims to promote uniformity, transparency, fairness, and efficiency in service charge administration. It ensures timely issuing of budgets and reconciliations, compliance with dispute resolution protocols, and disclosure of income like commissions from insurance contracts. Without mandated requirements and enforcement, occupiers—especially smaller tenants—may remain vulnerable to unclear charges and ineffective sustainability actions.
Enforcement supports the standard’s broader objectives by creating accountability, making sustainability not just a voluntary aspiration but an operational requirement embedded into service charge practices. This enforcement is vital to convert the ESG-related guidance from a policy statement into measurable, actionable outcomes within the commercial property sector.
The foundations for a more transparent and sustainable service charge industry are stronger, but the structure isn't finished yet. Without stronger enforcement mechanisms and greater accountability, some might argue the impact of the update will be limited.
Summary in brief:
| Aspect | Importance of Enforcement and Mandated Environmental Targets | |--------------------------------|----------------------------------------------------------------------------------| | Sustainability Impact | Ensures environmental goals are consistently pursued and cost recoveries justified. | | Transparency and Fairness | Reinforces clear budgeting, disclosure, and cost apportionment, reducing tenant-landlord friction. | | Dispute Reduction | Enforces “pay now, argue later” and compliance to limit prolonged disputes. | | Trust and Accountability | Creates landlord accountability to ESG and service charge standards. |
The 2025 update to the RICS Professional Standard on Service Charges in Commercial Property is a response to the increased scrutiny on the commercial property sector. Service charges have historically been a source of friction due to lack of transparency, vague budgeting, delayed reconciliations, and disproportionate costs. The update aims to provide greater transparency and address these issues, helping occupiers, especially SMEs and retailers, gain more insight into what they're paying for and whether it's fair.
The RICS also offers various educational opportunities, including undergraduate and postgraduate programs, apprenticeships, short courses, and professional training in property management. For those interested in specific areas of the built environment, the RICS offers standalone modules.
The first edition of the RICS Professional Standard on Service Charges in Commercial Property, published in 2018, was a necessary starting point, but the market has evolved and expectations have shifted. The second edition is a measured and necessary evolution, reflecting the realities of a more transparent, digital, and sustainability-conscious industry.
[1] Tony Wallace, University of the Built Environment, Personal Communication, 2025. [2] RICS Professional Standard on Service Charges in Commercial Property, 2nd edition, 2025. [3] RICS, Press Release: RICS Introduces New Professional Standard on Service Charges in Commercial Property, 2025.
- To ensure the service charge industry upholds its newfound transparency and sustainability efforts, robust enforcement and mandated environmental targets are essential, as they hold landlords accountable for consistently pursuing environmental goals and justifying cost recoveries.
- As the RICS Professional Standard on Service Charges in Commercial Property undergoes an evolution in its 2nd edition, it is crucial to consider educational opportunities such as undergraduate and postgraduate programs, apprenticeships, short courses, and professional training in property management, to equip future professionals with the necessary skills to lead the industry towards a more digital, transparent, and sustainability-focused future.
