Water and wastewater costs can be included within commercial service charges. Learn why arrangements vary and what information occupiers should review.
Water may be recovered through a service charge
A commercial occupier does not always receive a separate water bill.
In multi-tenanted buildings, managed estates and shared premises, the landlord or managing agent may receive the water bill and recover the associated costs from occupiers through a service charge.
Whether this happens at a particular property depends on:
The wording of the lease or occupancy agreement
How the property is supplied
Who holds the water account
Whether supplies and meters are shared
Which services are managed centrally
How costs are allocated between occupiers
There is no single arrangement that applies to every commercial property.
What could the water charge cover?
Depending on the property, water-related service-charge costs might include water and wastewater services associated with:
Individual occupied areas
Shared toilets and washrooms
Kitchens and refreshment facilities
Cleaning
Showers and changing facilities
Heating or cooling systems
Landscaping and external areas
Communal or vacant parts of the property
The fact that water appears in a service charge does not necessarily mean that all these items apply. The supporting information should establish which services and areas are included.
How might the costs be shown?
Water charges could be:
Identified as a separate service-charge item
Included within a utilities category
Combined with wider facilities costs
Recovered through an overall occupancy payment
Reconciled after the end of the service-charge period
The amount initially collected through a service-charge budget may also differ from the final cost shown in the year-end reconciliation.
Commercial occupiers should therefore consider both the initial budget and the later service-charge statement, together with the supporting information made available under the relevant property arrangements.
How might the charge be allocated?
Where one account, supply or meter serves several occupiers, the total cost may need to be apportioned.
The method could be linked to factors such as occupied area, an agreed proportion, measured usage or another basis set out in the property arrangements.
A charge is not necessarily inappropriate simply because it is shared. The important questions are whether:
The method is supported by the relevant agreement
The calculation is understandable
The underlying costs relate to the property
The apportionment has been applied consistently
Changes to the building or occupancy have been reflected
Legal interpretation of a lease falls outside a technical water-charge review and may require specialist property or legal advice.
What should an occupier ask for?
If water appears within your commercial service charge, consider asking for:
A description of the water and wastewater services included
The relevant service charge budget and reconciliation
The cost attributed to water and wastewater services
An explanation of how your share has been calculated
Confirmation of whether supplies or meters are shared
Information about material changes affecting the charge
The objective is not to create an unnecessary dispute. It is to obtain enough information to understand what is being paid and why.
When might further investigation be appropriate?
Further questions may be worthwhile where:
The cost has changed significantly without a clear explanation
The allocation method is not apparent
Premises have been extended, divided or reconfigured
Occupancy has changed
The water supply arrangements are unclear
Different records appear inconsistent
The organisation cannot establish what service it is funding
None of these points proves that a charge is wrong. They indicate that additional information could be needed before the position can be properly understood.
How WTR Utilities can help
WTR Utilities can help examine the available water, property and charging information to clarify how water costs may affect an occupier.
Where the evidence raises further questions, we can help identify what should be explored with the landlord, managing agent, facilities provider or other relevant party.
If water costs appear within your service charge but the basis is unclear, contact WTR Utilities for an initial discussion.
Important information: This article provides general information about non-household water and wastewater arrangements. Individual accounts, properties and charging arrangements vary. The content should not be treated as confirmation that any particular charge is correct or incorrect, or as legal advice on a lease or property agreement.