New service charge reporting rules for commercial property from 2026

Landlords, managing agents and property managers should prepare for significant changes to the reporting of commercial property service charges as updated guidance from the ICAEW and Royal Institution of Chartered Surveyors (RICS) comes into effect for service charge periods commencing from 1 January 2026.

The revised guidance is designed to improve transparency, consistency and accountability in the management of commercial property service charges. It aligns with the updated RICS Professional Standard: Service Charges in Commercial Property (2nd Edition) and introduces a more structured approach to the preparation and independent review of annual service charge statements.

Under the new framework, annual Statements of Service Charge Expenditure should generally be reviewed by an independent reporting accountant, unless the cost of such a review would be disproportionate, for example at smaller properties. The preferred form of review is now an engagement conducted under the internationally recognised ISRE 2400 (Revised) standard, providing tenants with greater confidence in the accuracy and reliability of service charge reporting.

Greater transparency and compliance

The guidance also places a stronger emphasis on clear financial disclosures, including accounting policies, reserve and sinking funds, accruals, insurance claims and landlord contributions. Greater transparency is expected around how service charge monies are managed and how costs are allocated and recovered.

For landlords and managing agents, compliance with lease requirements remains critical. Where leases specify particular accounting or reporting requirements, failure to follow them could affect the ability to recover service charge costs from occupiers.

The changes form part of a wider industry drive to improve communication between landlords and tenants and to ensure service charge accounts are prepared on a consistent basis across the commercial property sector.

Preparing for implementation

While transitional arrangements are available for some existing funding and payment plan agreements entered into before implementation, RICS has stated that the new standards should be fully adopted for service charge years ending 31 December 2026 and beyond.

Landlords and managing agents should therefore review their current service charge processes, reporting procedures and accounting arrangements now to ensure they are ready for the new requirements and avoid potential compliance issues in future reporting periods.