The code is endorsed by the British Property Federation, the British Retail Consortium, the British Council for Offices, BCSC and the Property Managers Association. And for the first time it has been adopted as official guidance by the RICS, meaning its members are required to adhere to it.

Chris Edwards, chairman of the RICS service charge steering group says "The code will open a relationship of trust and transparency between owners and occupiers and help to eradicate one of the most contentious areas of discord".

The main aim of the code is that service charges should be cost-neutral for owners, involving neither a profit or loss. The code explains that this does not mean suppliers of services cannot make a reasonable profit on the services they provide, or that managers cannot make a profit on their management services. But the costs should be transparent so that all parties - owners, occupiers and managers - are aware of how the costs are made up.

Edwards concedes that where service charge provisions are set out in a lease, the new code will have no power to override the lease terms. But he says even existing leases should be read in conjunction with the code. "This will enable users to identify the best way forward in interpreting that lease to ensure effective services management," he says.

And from 1 April 2007, when the code comes into effect, all new leases should comply with the code. And wherever possible at lease renewal, leases should be brought into line. In some cases this could mean occupiers are required to pay for services that previously were free, and if this is the case the rent should be adjusted to reflect this, the code recommends.

It is unlikely that all leases in a shopping centre will be up for renewal on the same date, and the code recognises that this may lead to a 'dual' service charge. "Interim measures may therefore be necessary to ensure the practical operation of the services and the recoverability of the service costs during the intervening period," it warns.

To ensure that service charge budgets on different properties can be accurately benchmarked, the code includes a set of standard cost categories. And managers will have to issue budgets to occupiers with an explanatory commentary at least one month prior to the start of the service charge year and issue a reconciliation to all users within four months of the year end.

BPF Chief Executive Liz Peace acknowledges that this would mean a change in working practices for many owners and managers. She explains: "The guidance offered is deliberately challenging and will over a period of time, require significant changes to systems and practices, hence the need for a lead-in-period. Landlords, I am sure, will use the next 10 months wisely, to work with their agents to ensure the principles enshrined in the code are implemented in day-to-day practice."

British Retail Consortium director general Kevin Hawkins welcomed the code and says he is confident the recommendations will help deliver a step-change in the way service charges are managed in high streets, retail parks and shopping centres.

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