Apportionment is the method of sharing service charge costs between occupiers in multi-tenanted premises. This method must be compliant with the terms of the lease. The exact method for apportioning costs is not always specified by the lease, but it is often covered by a catch-all “fair and reasonable proportion” provision.

The Royal Institute of Chartered Surveyors (RICS) recommends in the RICS Code of Practice, “Service charges in commercial property – 3rd Edition” that costs should be apportioned according to three core principles:

  • Costs should be allocated to the relevant expenditure category. Where reasonable and appropriate, costs should be allocated to separate schedules and the costs apportioned to those who benefit from those services.
  • The basis and method of apportionment should be demonstrably fair and reasonable to ensure that individual occupiers bear an appropriate proportion of the total service charge expenditure that clearly reflects the availability, benefit and use of services.
  • Managers are expected to make available to all occupiers a full apportionment matrix that clearly shows the basis of calculation and the total apportionment per schedule for each unit within the property/complex.

In April 2019 the guidance in the RICS Professional Statement, “Service charges in commercial property – 1st Edition” comes into effect for service charge years commencing after this date. The core principles relating to apportionment remain as above but there is a new mandatory requirement:

  • Owners and managers must ensure that a service charge apportionment matrix for their property is provided annually to all tenants

The RICS Professional Statement reiterates that the apportionment matrix should be clear and transparent. An individual occupier should be able to easily verify the basis and method of calculation used in arriving at their share of the service charge costs. Any costs that should be borne by the landlords, for example void premises, are not to be recovered from the remaining tenants by way of a skewed apportionment matrix. A best practice example of an apportionment matrix is demonstrated in Bellrock’s SCOR for Offices 2018, pages 14 to 15, which can be downloaded here.


In most cases, particularly in larger buildings or shopping centres, tenants will not benefit equally from the services provided. Therefore the service charge is typically divided into separate “schedules” with each schedule being apportioned between the tenants to reflect the benefit derived from the services. Tenants might pay a different percentage for each schedule, or possibly not contribute to a given schedule at all. For example, a tenant that does not benefit from the use of the car park may not contribute to its maintenance costs.

Methods of apportionment

Most agents apportion the service charge according to the percentage of demised area each tenant occupies. However, many shopping centre developments use a “weighted-floor area” matrix which ‘weights’ the cost per floor area. This way a tenant renting twice the floor space may not pay double the service charge. There is an example of a weighted apportionment schedule in the RICS Professional Statement, appendix CE, page 61. Other methods can also be used, for example, apportionments based on rateable value. The exact method is largely dictated by the lease and whichever is used, the agent should clearly state this in accordance with RICS best practice guidelines.

Note: For a more in-depth explanation of this topic and how it should be applied please see pages 12 to 14 of the RICS Code of Practice; Service Charges in Commercial Property or pages 18 to 20 of the RICS Professional Statement; Service Charges in Commercial Property.

Link to our first article – “An Introduction to Service Charges”

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