The Challenge

Following appointment as the new managing agent for a large 5-block estate, we undertook a comprehensive review of service charge accounts, budgets, and lease agreements. It quickly became evident that several blocks were being unfairly charged:

• Two blocks were contributing towards a lift they did not have

• Certain blocks were paying for internal redecorations in other blocks, while some redecorated blocks were contributing nothing

• Leaseholders and the RMC were unaware of these discrepancies, which had persisted under previous management

These inaccuracies threatened leaseholder trust and could have led to disputes or formal complaints if not addressed promptly.

The Obstacles

• Misapplied charges were embedded in previous accounts and annual budgets

• Accounts staff were hesitant to make corrections without direct instructions, citing lease agreements

• Potential for leaseholder dissatisfaction and complaints if corrections were delayed

Our Approach

• Conducted a full review of service charge schedules and historical payments

• Created a corrected, fair apportionment matrix based on the specific amenities and works relevant to each block

• Submitted the revised schedules to the accounts team and liaised with them to ensure all line items were adjusted correctly before year-end

• Drafted a cover letter to all leaseholders explaining the corrected allocations and addressing any shortfalls caused by previous mismanagement

• Maintained regular communication with the RMC to ensure transparency and rebuild trust

The Outcome

All service charge misallocations were corrected prior to year-end accounts. Leaseholders were informed and understood the changes, and the RMC was confident that all future budgets would be fair and transparent. The estate now operates with clarity, reducing the risk of disputes and building stronger relationships between the managing agent, RMC, and leaseholders.

What If We Hadn’t Stepped In?

If these errors had gone unchallenged, leaseholders would have continued paying unfair and inflated charges, with some blocks subsidising others. This could have led to mounting disputes, formal complaints, or even a tribunal case against the RMC. The estate’s reputation would have suffered, creating distrust between leaseholders and directors. In the long run, property values could have been negatively affected, and the RMC exposed to potential legal and financial liabilities.

Ready to ensure your service charges are fair and transparent?

If misapplied budgets or incorrect allocations are affecting your estate, we can review, correct, and streamline your service charge process so you have clarity and confidence.