At DeVono, we review many service charge budgets and certificates provided to us by our client base and have seen some interesting trends leading into 2022. As the UK is starting down the road to a new form of “normality”, the majority of companies are working hard to reassess the workplace and how they intend to use and occupy the office going forward. Likewise, building managers of multi-tenanted buildings are re-assessing the necessity of precautions put into place during the pandemic. These included: Some of these actions have pushed up service charges, while others have brought about savings, often to different degrees.
Tenants not occupying office space often expect savings to be achieved by the building management team, however, few buildings have been total unoccupied and cost increases may be experienced in balancing service charges for 2021 (and 2020 if not already reconciled) within 2022.
However, 2022 service charge budgets are likely to increase overall against prior years. It is expected that building refurbishments, maintenance and repair works are likely to cost more post-pandemic due to increases in the cost of materials and labour. An increase in the Living Wage forecast in 2022 will also push up the cost of both soft and hard services. The seismic increases in utilities will undoubtably also filter through in higher service charges and demised electricity charges. Expectations are that a hybrid working arrangement will continue to be common place and offices are not likely to return to full occupancy. So cost savings in some areas of expenditure should still be possible against pre-pandemic levels as Britain reduces covid-related precautions and buildings are brought back into normal operation.
