Energy Efficient Offices Command Higher Service Charges 

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20 February 2024

A benchmarking report from BDO has found that the most energy efficient office buildings tend to have higher than average service charges.

In their review of service charge expenditure data from late 2020 through to the beginning of 2023, BDO discovered that offices with an outstanding or excellent BREEAM rating had total service charge costs that were 26 per cent higher than the other offices it surveyed.

Service charge costs were 6 per cent higher for offices with an EPC rating of A or B compared to all other offices.

Andrea Hunt, BDO’s Lead Partner for Service Charge Accounting said: “This is likely to be because the most efficient buildings tend to be newer with a more modern design, larger common areas and a higher standard of amenities.”

However, the highest costs overall were seen in the least efficient offices (with an EPC rating of E to G).

FM Services Responsible for Highest Service Charge 

Overall service charge costs were split between soft services (30 per cent), hard services (30 per cent), management costs (21 per cent), utilities (18 per cent) and insurance (one per cent).

Service charges for office accommodation rose by an average of 10 per cent year-on-year in 2023, due to “a significant hike in soft service costs such as cleaning and sustainability services,” according to the BDO report.

Andrea Hunt added: ‘These findings build on previous industry research which has identified the growing relationship between efficiency & sustainability ratings with the capital or rental value of a building asset.

“This benchmarking report also highlights where inflation has had the biggest impact on service charge costs, and what differences we are seeing in costs across different types of office accommodation.

Picture: a photograph of an open breakout area in an office, with armchairs, sofas and floor lamps. Image Credit: Unsplash

Article written by Ella Tansley | Published 20 February 2024

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