Flat Living WeBsiteGUiDe


If service charges aren’t paid,


leaseholdersmust bemade awareof the possibilityoflegal proceedings


What to do about service charge arrears? SLCSolicitors offeradvicetoRMCson


thecredit crunch, creditcontrolandzero tolerance Inthesedayswhen ‘the credit crunch’isawellusedexpression, it has neverbeenmoreimportant tomake sure that directors of self-managed resident management companies(RMCs) andmanagingagentskeepfirm controlofservice chargecredit control procedures. Januaryisthe busiestmonth


badenough, such reductions in services canleadtoadownward effectonpropertyvaluesand decrease furtherany remaining equity available to leaseholders.


Creditcontrol andthe service chargedemandprocess


forservice chargedemands and RMCdirectors andmanaging agents arefindingout that non paymentisincreasing. Undoubtedlyblockmanagement is affectedasmoney becomes less readilyavailableand reduced levels ofmaintenanceand services areexperienced by leaseholders.Asifthatwerenot


Theprocessofensuringprompt collections has not changed because of the current economic climate. However, the increased amount of timedevoted to the collection process has placed RMCdirectors andmanaging agents under increased pressure frompaying residents who rightly expect block maintenance and services to remain high.


What recorDs shoUlD oUrrmc keep?


AllCompanieshaveaduty tokeepaccounting records, forexample receiptsandinvoices. HereweexplainwhatRMCsneedtodoto


prepareannualaccounts ForFInancIalyears startingonorafter6April2008theCompanies Act2006andRegulationsmadeunderit,specifytheformatinwhich companiesmustprepareannualaccounts,theinformationthatneeds tobedisclosed,andtherulesaffectingthevaluationandtreatment ofthetransactionsandbalancesappearingincompanyaccounts. TheCompaniesAct1985anditsRegulationsmadeunderitapplyto companyaccounts forfinancialyearsstartingbefore6April2008. Theserequirementstoproduceannualaccounts arelongand


complicated. Ifyouareuncertainhowtoproducethemyoumaywish toconsiderconsultingaprofessionalaccountant toprepareyour annual statutoryaccounts.


Toreadthis article in full,gotohttp://www.flat-living.co.uk/ advice/487-what-records-should-our-rmc-keep


Flat Living Issue 15 Whenademandisnot paid


on timeit is crucialthatapolite reminder is sent to aleaseholder as promptly as possible.Inthe continuedabsence of paymenta leaseholdershouldbewarnedof thepossibility of legalproceedings beingcommenced andasolicitor instructed.


Late payment administration charges and Interest


Importantly duringthe process of servingservice chargedemands and chasing reminder letters (with accompanyingnotices relating to tenants’ rights andobligations – s.153 and 158Commonhold& LeaseholdReformAct 2002),RMCs andmanagingagentsshould


ensure that anyslowpayersare penalisedwithlatepayment administration chargeswhen appropriate.These chargeswill go someway to recoveringmonies for the additional timespent chasing payment.Thelegislationmerely states that such charges should be reasonable. Usuallyaleasewill allow


interest to be charged to leaseholderswhodelay payment – typicallythe interest ratequoted within a lease is4%above base rate.●


Toreadthis article in full,go to:http://www.flat-living. co.uk/advice/485-what-to- do-about-service-charge- arrears


What else is thereonline forme? Othertopicscovered by


this area of thewebsite include: nyour at-a-glance guide to service charges http://www.flat-living.co.uk/advice/327-your-at-a- glance-guide-to-service-charges


nhowto recover outstanding service charges http://www.flat-living.co.uk/advice/333-how-to-recover- outstanding-service-charges


nProtecting service chargemonies http://www.flat-living.co.uk/advice/339-protecting-service- charge-monies-fpra


nWhat is theservice chargeresidential management code? http://www.flat-living.co.uk/advice/341-what-is-the-service- charge-residential-management-code


nnewrules for service charge accounting http://www.flat-living.co.uk/advice/628-new-rules-for-service- charge-accounting-


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