Reclaim excess service charges: Learn why management fees and repairs are often billed incorrectly and how you can defend yourself against this.
Service charge settlements are often prone to errors in commercial tenancy law, as there is a high degree of contractual freedom in this area. Common sources of error include the inadmissible allocation of vacancy costs to the remaining tenants and the mixing of apportionable maintenance costs with non-apportionable repairs. Important for you: Anything that is not explicitly stated in the tenancy agreement may not be charged. You also have the legal right to request access to the original receipts at any time.
For many entrepreneurs, looking at the annual service charge statement is a nuisance that is quickly dealt with: a quick check of the total amount, a sigh about the increased energy prices, and then the additional payment is transferred. After all, no one wants any trouble with the landlord, and there is often not enough time for a detailed review in day-to-day business.
It is precisely this negligence that can cost you several thousand pounds every year. In contrast to residential tenancy law, where tenant protection is very strict, commercial tenancy law in Switzerland is largely governed by freedom of contract. As a result, landlords often try to pass on costs to tenants that are actually the responsibility of the owner. However, without a detailed comparison with your tenancy agreement, the bill is little more than a non-binding cost estimate.
Before you go into the details, you need to clarify what has been contractually agreed. With a flat rate, everything is covered by the monthly amount. The landlord is not allowed to make any additional claims, even if the oil price explodes – but you also don't get anything back if the winter was mild.
However, most commercial leases are based on payments on account. You make an advance payment, and at the end of the period, the actual costs are settled. This is where the risk lies: if the payments on account were set too low to make the rent appear cheap, you may be in for a rude awakening at the end of the year. The key point here is that the landlord must prove that the costs were actually incurred.
When checking your bill, you should focus on the following three items. Experience shows that this is where most mistakes occur to the detriment of the tenant.
Vacancy: Are you paying for your neighbours? This is a classic problem in office buildings or business parks that are not fully let. The costs for heating, building maintenance and general electricity are incurred for the entire building. However, if 30 per cent of the space is vacant, the landlord cannot simply pass these costs on to the remaining 70 per cent of tenants. The costs attributable to vacant space are the responsibility of the owner. They bear the vacancy risk, not you. Therefore, check the allocation formula carefully. If the total costs are divided by the rented space instead of the total space, you are paying too much.
Maintenance vs. repairs: The boundaries here are often deliberately blurred. As a general rule, operating costs (allocable) are costs incurred through ongoing use, such as service contracts, maintenance, cleaning or chimney sweeping. Repair costs (non-allocable) are repairs and replacements to maintain the value of the property. A concrete example: the maintenance contract for the lift is apportionable. However, if the lift motor is defective and needs to be replaced, this is a repair. The landlord must pay for this. In many bills, the items ‘lift’ or ‘heating’ include flat-rate sums that cover both. It is worth taking a closer look here.
The administration fee: In commercial properties, it is common for the landlord to charge a fee for preparing the statement and managing the property. However, this is only permissible if it has been explicitly agreed in the tenancy agreement. If this clause is missing, the administration fee is already included in the net rent, if applicable. In addition, the amount must be reasonable – rates between 3 and 4 per cent of the chargeable ancillary costs are common in Switzerland, but higher flat rates are often applied.
Be wary of items such as ‘Miscellaneous’, “General” or ‘Other operating costs’. According to Swiss tenancy law (Art. 257a OR), the tenant is only required to pay for ancillary costs that are clearly and precisely specified in the contract. A general collective item is often non-transparent and legally untenable. If you cannot identify what the money was spent on, you do not have to pay it in case of doubt.
An Excel spreadsheet from the landlord is not proof. The law gives you a powerful tool: the right of access. According to Art. 257b OR, you have the right to view the original receipts.
You do not have to blindly trust your landlord. If an item (e.g. unusually high caretaker costs or repairs to the ventilation system) seems disproportionate to you, request copies of the relevant invoices. Often, simply announcing that you will be checking the receipts in detail is enough to get corrected bills.
The service charge statement is not set in stone, but rather an invoice that may contain errors and often does. Take the time to compare the statement line by line with your tenancy agreement. Pay particular attention to the allocation key for vacant properties and the separation of repairs. If in doubt, it is worth consulting an expert or property trustee, as these small errors can add up to considerable amounts over the term of a ten-year tenancy agreement.
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