Module 2 · Chapter 5

Service Charge and Insurance

When a landlord lets one floor, the tenant pays a share of the building's running costs and of its insurance. The lease fixes that share, caps it and stops the rent after a fire.

≈ 12 min read 8-question test

In this chapter

  • What a service charge pays for when one floor is let
  • How a fixed share, named exclusions and a cap protect the tenant
  • How the landlord insures, and when damage stops the rent

5.1Service charge and insurance in one paragraph

The roof, walls, hall and stairs of the office block serve both floors. Fellgate keeps them running and in repair, and Linnet pays half of the cost as the service charge. Fellgate also insures the whole site under one policy, and Linnet pays a tenth of the premium as the insurance rent. Both are part of the Rents (Chapter 3), so an unpaid service charge is treated like unpaid rent.

Key point

Linnet pays a fixed share of a listed set of costs. It does not pay a fair slice of whatever Fellgate decides to spend.

Also in this chapter

  1. What the service charge pays for
  2. Why the share is fixed, and what is left out by name
  3. How the cap works
  4. Paying on account, then settling up
  5. Why the landlord insures the whole site
  6. When damage stops the rent
  7. Your job

Preview

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