The effect of service charge responsibilities on tenants leasing experience and satisfaction: A New Zealand perspective

Halvitigala, D 2018, 'The effect of service charge responsibilities on tenants leasing experience and satisfaction: A New Zealand perspective', Journal of Corporate Real Estate, vol. 20, no. 1, pp. 41-55.


Document type: Journal Article
Collection: Journal Articles

Title The effect of service charge responsibilities on tenants leasing experience and satisfaction: A New Zealand perspective
Author(s) Halvitigala, D
Year 2018
Journal name Journal of Corporate Real Estate
Volume number 20
Issue number 1
Start page 41
End page 55
Total pages 15
Publisher Emerald Publishing Limited
Abstract Purpose: Despite the growing diversity of lease structures in different global economies, the existing literature related to property service charge mechanisms has been largely confined to the UK property market. This study aims to examine tenants perceptions, experiences and satisfaction with being responsible for service charges in New Zealand, where major office submarkets are dominated by alternative forms of leases with different service charge responsibilities. Design/methodology/approach: The study uses a structured survey of 107 major tenants of New Zealands listed property trust-owned properties located in Auckland (where net leases dominate) and Wellington (where gross leases dominate) complemented by ten in-depth interviews with senior property managers of tenant organisations. The collected data were analysed using various statistical tests and thematic analysis. Findings: The results identify that tenants who are directly responsible for service charges are significantly more dissatisfied with their operating expenses (OPEX) responsibilities than tenants who do not have direct service charge responsibilities. They are dissatisfied with the interpreting, budgeting, calculating, accounting, allocating and auditing processes in the service charge management process. Tenants who are directly responsible for service charges are significantly more dissatisfied with the operation and maintenance procedures of their buildings and have weaker relationship strengths with landlords. Tenant perceptions of being responsible for service charges vary with their power relationship with the landlord, lease expectations and priorities, financial constraints, willingness to take part in the management of the premises and trust in the landlord. Originality/value: This research highlights the importance of understanding the complexity of service charge mechanisms in countries where there are no regulations or codes of practice governing them and their impact on tenant lea
Subject Business and Management not elsewhere classified
Keyword(s) Alternative leases
Landlordtenant relationship
New Zealand
Property management
Service charges
Tenant behaviours
DOI - identifier 10.1108/JCRE-04-2017-0010
Copyright notice © Emerald Publishing Limited
ISSN 1463-001X
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