When it comes to the many challenges of block management, simple methods of prevention are often the best measure to ensure small problems don’t snowball; such as regularly cleaning the guttering to prevent issues with damp. It makes sense to apply the same practice to your service charge invoices.
Sending an incorrect invoice could mean you potentially miss out on important service charge income and subsequently risk impacting on the services you can slickly provide to leaseholders.
Brady Solicitors’ service charge experts help you through the sticky point of getting your service charge invoices right. By looking to improve and maintain credit control systems you can ensure your arrears recovery process is efficient and robust.
Writing the “perfect” service charge invoice
Leaseholders may be able to withhold payment if the service charge invoices are incorrect which can impact quickly on the important services you provide for the block. We advise that a checklist approach can help to ensure your service charge invoices are accurate:
- Include full name and contact details of the landlord and state your address as well if you are collecting on behalf of the landlord
- Ensure you include the name of the leaseholder and the address to which the invoice is served to
- Include a full copy of the Tenant’s Rights and Obligations Notice for service charge. Do be aware that there is also a separate set of Rights and Obligations for Administration Charges
- Ensure you are sending the service charge invoice in accordance with the lease provisions, including stating if payment is due in advance or arrears
- Include an address for leaseholders to serve notices or complaints to
- If required by the lease, ensure the accounts are certified by the correct person
These points also apply to other types of invoice such as Administration Charges.
By implementing the above checks into your credit control processes you can impact on service charge arrears levels which in turn will help maintain a steady flow of monies for managing the block.
Reasonableness of service charge
As well as getting your invoices correct, the amount you are invoicing for needs to be reasonable. S.27A of the Landlord and Tenant Act 1985 outlines that leaseholders can apply to the First-tier Tribunal to determine if the service charge and other associated costs are reasonable. If the FTT rules that the service charge or administration charges are not reasonable, they will be disallowed from the service charge.
The key “take away” from this is to ensure that your service charge and administration costs are reasonable. We regularly advise clients to keep records and evidence to prove the impact of non-payment and the extra work caused in a quantifiable manners should the need arise to present this at a Tribunal or in Court proceedings.
Using specialist solicitors to recover arrears
You will find that some leaseholders will withhold payment for various reasons. If you’ve ensured the invoices have been correctly served and your internal credit control processes have not resulted in payment that is the point you should consider escalating to specialists to help to recover the outstanding arrears.
If the arrears are over £350 or are older than 3 years then Brady Solicitors can look to recoup the service charge arrears at no cost to yourself by recovering the costs from the defaulting leaseholder. Using specialist solicitors to recover arrears keeps the service charge incomes flowing into your account so you can manage the block effectively.
If you need any help with your internal credit control or need a legal eye to check if your service charge invoices are correct, the service charge specialists at Brady Solicitors will be happy to advise, call us on 0115 985 3450 or click here to send us an email.