News Flat Living Energy code 9


Leasecampaign 10 Conference


11 what’S happening in leaSehold Sector code of Practice


leaseholdersletdown bynewenergycode


Thousands of residential leaseholders could face hefty backdatedenergybills despite anew Code of Practice that is supposed to protect them, ARMA has warned. Thenew Code,issued by


the Energy Retail Association (ERA), is supposed to protect smallbusinesses–including leaseholderrun Residents Management Companies (RMCs) -from cripplingbackdated energy billsbut completely failstodo so,accordingtothe Association of ResidentialManagingAgents (ARMA).ARMAbelievesthat RMCs will be left particularly vulnerable,saying, “These micro-businesses are run by volunteerleaseholders purely to manage thecommunalareas of their homes and do notmake a profit. Unexpected bills, often theresult of energy companies misreadingmeters, can run into tens of thousands of pounds and areespeciallydamagingtothe leaseholderswhomust then foot thebillthrough theirservice charge payments”. Under the Code, energy


companiescommittolimit backdatedbills to threeyears for electricity and five years for gas. ARMAsays thelimit should be


consultation proposedchangestoservicechargeaccounting


TheGovernment’sUrgent Issues Task force has consulted on proposed changes to the accounting procedures for ResidentsManagement Companieswhen they deal with transactions for flat owners. InMay, a‘draftabstract’was


issued in response to a request fromthe Institute of Chartered AccountantsinEngland and Walestolookatthe wayservice charges are dealt with in the financial statements ofRMCs.


This abstract dealtwith: nHelpingRMCsrecognise which transactions need to be included in financial statements


Flat Living Summer 2012


by identifyingwhether theRMC is acting as principal (landlord) or agent. Guidance on this is provided in FRS5 andinmost cases theRMC is likely to be acting as an ‘undisclosed agent’


on behalf of flat owners. nHelpingother peopleentering into afinancialagreement with anRMC – including flat owners andcreditors –understandthe


RMC’sposition; nConfirmingthatmoney collectedasservice charges needs to be held in astatutory truston


behalf of residents; and nProtecting flat owners andanyoneelseusingRMC


financial statements by disclosingwhereinformation can be found that details the transactionsmade. Theconsultationclosedin June andthe intentionisthat


all change for rMc accounting


anychangesmade to therules on servicechargeaccounting will be appliedtoaccounting periods ending after 31 December 2012, although early adoption will be permitted.


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energy companies will treat the communal areas to blocks of flatslikethe domestic premises they are. At a timewhenmany families are struggling with fuel poverty, it is simply not fair that flat owners could still be billed for charges goingbackfiveyears.’’ Mary-Anne Bowring, Chair of


Mary-anne


Bowring:critical of code


oneyear, thesameasfor domestic customers and that the Code should be compulsory -sofar it is voluntary and not all energy suppliers have signed up. ARMAchairman Peter Dening,


whoisapartner at Pennycuick CollinsinBirmingham, said: “Weare very disappointed that theERA has notgonefurther to protect leaseholders fromthe disastrous effects of backbilling. ARMAhas campaigned for this Code of Practice so that


membership at theInstitute of Residential PropertyManagers (IRPM) said: “Leaseholders should notbepunishedfor themistakes of energy suppliers. In these tough economic times it is simply not acceptable that residents canreceive unexpectedbills for thousandsbecausetheir supplier has misreadameter.Thisis whyweare backingARMA’scall foraCodeofPracticetoprotect leaseholders fromthe crippling effectsofsuchmistakesand avoid unnecessary debt”. ARMAestimatesthatfor


around 60%of the blocks of flats in England andWales, the effective landlord for supplies to communal areasisanRMC. Theorganisationrecently agreed a protocol with ERA to protect leaseholders frompower disconnections to thecommunal areas of their propertywhich can be downloaded fromthe ARMA website atwww.arma.org.uk.


theprestigiousWalpole Mayfair building


Price record


Mayfairstill hasMonopoly onprices


Despitethe continuing slump inUKhouseprices,the sale of a penthouse apartment on ArlingtonStreetinLondon’s exclusiveMayfair recently set a newprice record, accordingto PropertyWeekmagazine. The3,100 sq ft apartment,


which also boasts a substantial roof terrace, wassoldtoaBritish buyerfor just over £14million. At £4,542/sqft, theapartment easily beat the £3,800/sq ft record previously set for this part of London. The Grade II listed building,


formerly the homeof eighteenth century Prime Minister Sir Robert Walpole, has been redeveloped by Oliver Burns. Locatedoppositethe Ritz the building comprises five luxury apartments.Incontrastto the national trend, PropertyWeek reports that prices in London’s Mayfair and neighbouring St James’ rose by 11%inthe 12 monthstoFebruary2012.


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