Over the last few weeks of lockdown Brady Solicitors’ service charge team has been tracking and assessing the key challenges and changes in the Courts’ and lenders’ current working practices to ensure that we can deliver as accurate a picture as possible of what to expect in coming weeks and months, regarding service charge arrears.

We share some early conclusions and advise what procedures remain successful for service charge recovery.

Is there an increase in service charge non-payment?

The picture is very variable and ARMA reports* a greater incidence in the North so far. Managing agents are recounting to Bradys everything from minimal changes so far right through to an uplift to 60% non-payment across a portfolio. Anecdotally the timing of leases seems to be shaping cycles. Where Managing Agents have a bulk of leases with July payment dates they may not have seen any change yet. There is evidence, again anecdotal, that buy-to-let landlords seem to be the most aggressive non-payers, especially where they have lost rental income.

It is certainly the case many Managing Agents are becoming increasingly aware of the importance of ensuring their client and lease obligations are being met and that their long-standing supplier relationships are being protected and continued to be paid. Effective credit control and recovery is a key factor in achieving that balance

Central government approach to service charge arrears

Through our status as ARMA partners, Brady Solicitors are aware of the ongoing discussions with ARMA and central government. Dr Nigel Glen reported* that the Government understand the nature of service charge and the importance to maintain building management. Initial discussions regarding a service charge holiday have currently not developed any further. It was also decided pre the Corona Virus Act that the requirement for sending service charge demands by post would not change.

For more information on this see our update on Brady Solicitors Current Recovery Procedures

After some challenges in the initial weeks of lockdown we now have a clearer picture of how courts and banks are  functioning currently.

Overall, the message is  positive, and we are seeing high levels of success with service charge recovery processes with minimal changes to our procedure.

  • Letter before Action – These are being sent as normal with updated text outlining the continued obligation to pay service charges in COVID-19. It remains the case that the majority of claims are settled at this stage. Even though there has been some slowing of payment by lenders, Bradys are working to  the usual level of speed, expertise, thoughtful leaseholder communication and success.
  • Claims – These are made as standard via a volume online court process.
  • Judgments – These are available online. There are some delays on paper copies, but this is reducing and not all lenders require them.
  • Lenders – Mortgage companies are paying regularly. There was initially is a backlog and slow down due to the logistical challenge lenders have faced working remotely coupled with the demand for processing mortgage holidays. We are leveraging our contact information and relationships with senior staff at the key lenders to ensure Bradys clients’ cases are at the top of the pile for payment.
  • Leaseholders – we are continuing to see the majority of leaseholders making payment. Some cite COVID as the reason for non-payment and our teams are trained in how to deal with these forms of objections in our usual firm but fair manner to ensure that payment is obtained as quickly and appropriately as possible

Common areas of confusion

Leaseholders seem to be confusing the mortgage payment holiday that many have taken up as also applying to service charges. This is of course not the case.

We have also seen a small number of leaseholder communications where they are suggesting there is nothing a Managing Agent can do as all property possessions are “banned”.  Clearly this is not the case. Possession proceedings on residential properties have been stayed until early July currently.

We are persuading leaseholders to pay to avoid costs increasing, and offering reductions in costs over and above our usual rates of reduction, to assist settlement.


We are still seeing cases being listed, however possession hearings will not be heard and small claim trials will be slow to be listed. Again however, the issue is not one that will go away for leaseholders and they must be told that cases that take long in getting to a hearing are very expensive and they are better settling the case early to avoid huge expense later.

Where there is a lender in defended cases we will try to persuade the leaseholder to agree to the lender paying arrears and costs.

Only a very small number of cases ever get to this point of hearing in any event, and most are settled prior to hearing.. Our teams are focusing on negotiations prior to trial now more than ever, with a view to securing early settlement of arrears.

Logistics support from Bradys

Some Managing Agents have reported that they may be challenged by remote working and keeping on top of estate cash flow. Get in touch as we are helping clients with advice on demands and we can even assist with chaser letters and volume printing if needed.

Whether it’s sensitive recovery of service charge arrears or even a hand with some bulk printing to get those demands out, we are here to help – please don’t hesitate to get in touch.

*Dr Nigel Glen comments on the April ARMA Partner Update.