Case Studies

Property Management Case Studies - BNP Paribas Real Estate UK  

Confidential client

Saving £2.45m by challenging the superior landlord service charge
We robustly challenged two years' service charges which included huge year on year increases

  • Location London
  • Key figures £2.45m saving on a 175,000 sq ft office building
  • Contact Lynne Brown, +44 (0)20 7484 8188

 

The results

  • Our client saved £2.45m service charges over two years
  • We demonstrated to the superior landlord that our client would only accept tight, streamlined budgeting in future; all budgets would be challenged
  • Our client was able to run the building to lease end within their original funding estimate without having to request further funding internally

The challenges

  • Our client inherited the lease of the building through an acquisition. They had no requirement to occupy the space which was largely sub-let to a variety of tenants. All sub-leases bar the acquired business were subject to service charge caps set at around £10psf. In 2008-2009, the service charge was increased by £1m, the majority of which would hit our client due to the caps.

What we did

  • We undertook a line by line examination of the service charge budget
  • Our team wrote to the superior landlord and challenged each line item
  • A team of specialist M&E engineers examined the lifting equipment and plant rooms as most of the budgetary increase was M&E related
  • We requested copies of all reports that formed the basis for equipment replacement
  • Following an unsatisfactory response from the landlord’s agent we withheld all the disputed service charge (£1m in the first year, £1.5m in the second year) 
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