The Law & Property Accounts

Expert Service charge accounting demands 100% transparency, an understanding of the lease and legal requirements as well as being able to understand what value for money means. Collecting service charge arrears will be frustrated and can fail at Tribunal if the Service Charge Accounts are not right - and - a £2,500 fine applies if they are not produced.

The legal requirements around holding Client Money and particularly services charges is complex - we have expert advice on hand.

Service charge accounts are 'not for profit' and required by virtue of Landlord and Tenant legislation not company law. Service charge accounts should not be confused with accounts for filing at Companies House.

For blocks of flats the Company Accounts that are required for filing at Companies House may be 'dormant', 'abbreviated' or 'trading' company accounts depending on whether ground rent is collected, lease extensions have been sold or whether owners have clubbed together and bought the freehold.

Otherwise, the service charges you demand may not be due, and if you need to go to Court to seek recovery your service charge accounts, Freehold Company or Right to Manage Company accounts will need to hold up to scrutiny.

Here are some tips, you'll need:

To hold service charges in trust` *Section 42A Landlord and Tenant Act 1987
To split balancing charges *Section 21-28 Landlord and Tenant Act 1987
To prepare service charge accounts if there are 5 or more service charge payers *Section 21-28 Landlord and Tenant Act 1987
Not to collect reserves unless the lease allows
Charges may be unreasonable if they are a surprise or unusually high *Garside v RFYC Ltd
Charges may not be due if consultation notices are not properly served *Phillips and Goddard v Francis
Unless you seek retrospective dispensation from consultation requirements *Daejan Investments Ltd v Benson and others"
All parts of Section 20 consultation must have lapsed before demands become valid
Service charges will not be due until the prescribed summary of leaseholder rights & obligations is served *Section 21B Landlord and Tenant Act 1985
Demands may not be compliant if an address in England and Wales whereon to serve notices is not provided *Section 48 Landlord and Tenant Act 1987