Bank Account for Residents' Management Company

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    Bank Account for Residents' Management Company

    Am I in the right forum...?

    I live in a leasehold flat in the basement of a large house. There are 11 flats in total. There has been an agreement in principle for the leaseholders to take over the management of the buildings from the current property management company, which should happen soon, probably in the next 6-8 weeks. There will be three directors initially (one of which will be me).

    We'll no doubt need to set up a bank account for the RMC. I have a business account currently with Starling Bank (good service and no fees) and my first thought was to open another business account with them, but because there are 11 shareholders and no PSC I don't think we will meet their eligibility criteria.

    Can anyone recommend a good business bank account for this sort of thing please? ie
    * Good service
    * Low fees (ideally zero!)
    * Debit cards for nominated individuals
    * Wouldn't need an overdraft AFAIK

    Also I understand that most RMCs are deemed to be "dormant" by HMRC for corporation tax purposes. I read somewhere that having an active business account would mean that the company couldn't be deemed to be dormant any longer. Is that correct? (in which case, do we need to do something to get around this?)

    Thanks,
    A.

    #2
    You need to open up a client account to receive and hold service charge monies. There should be no charges attached to the account.

    Comment


      #3
      Try HSBC for non-profit current account for holding service charge money.

      With cheque book for payment of suppliers of services but debit cards should not be allowed for service charge account.

      Comment


        #4
        You will probably need to obtain the original Certificate of Incorporation and Memorandum and Articles of Association and produce them as well as ID for each director.

        Comment


          #5
          Thank you both.

          Providing paperwork (memorandum & articles, certification of incorporation) - I have all that stuff already. ID for each director will be fine too.

          So...(showing my ignorance here) - one reply mentions setting up a client account and one talks about setting up a non-profit current account. Are these the same thing?

          And this is the only bank account we'll need?

          Comment


            #6
            You need to explain to the Bank that you need a client bank current account. Most of the major banks will understand. As long as you do not have any other income such as ground rent or expenses, that is all you will need to start with. You may need to open a client account deposit account to hold reserve fund monies depending on the wording of the lease.

            Comment


              #7
              If you want to open an account with "low fees" , you have to mention to the bank officer , it is for holding "non-profit" service charge money or you may be offered a business trading account with large monthly charges .

              From the company's position, this account will be holding money belonging to the leaseholders and so is called a "client account". So the bank account could be named " RMC ( Service Charge Account )".

              Comment


                #8
                Some banks call it a "designated client account", I suggest that you read section 6 of the RICS code of practice, 6.2 states that you should obtain a statement from the bank that the account is ring-fenced. You are not allowed to overdraw the account. You should advise all leaseholders the name of the account and the name and address of the bank.

                Comment


                  #9
                  Section 7.6 of the RICS code of practice is also relevant. It says that you must hold service charge monies, and any interest accruing, by way of statutory trusts … service charge monies must be kept separate from the (RMCs) own money and must only be used to meet the expenses for which they have been collected.
                  Monies should be held in a separate client service charge bank account.
                  The account should include the name of the client or the property or both within the title of the account.
                  You are under a duty to invest the trust funds not required to meet day-today expenditure.

                  Comment


                    #10
                    Thank you again. I'm struggling to understand some of the terminology here, I must confess. However I did recently download a pdf copy of the RICS code of practice, so perhaps a good first step would be for me to read it! A good second step might be for me to phone HSBC.

                    Comment


                      #11
                      Originally posted by eagle2 View Post
                      Section 7.6 of the RICS code of practice is also relevant. It says that you must hold service charge monies, and any interest accruing, by way of statutory trusts … service charge monies must be kept separate from the (RMCs) own money and must only be used to meet the expenses for which they have been collected.
                      Monies should be held in a separate client service charge bank account.
                      The account should include the name of the client or the property or both within the title of the account.
                      You are under a duty to invest the trust funds not required to meet day-today expenditure.
                      Thanks. On this: I've read the relevant bit of the RICS code now so I'm a little more comfortable. I'm going to speak to HSBC and a couple of other banks next week to see what they can offer.

                      What I'm not clear on is: "service charge monies must be kept separate from the RMC's own money". In this instance, what's the difference? What money does the RMC have other than the service charges? And what would the RMC spend save for outgoings related to building maintenance etc.? I'd assumed therefore that only one bank account - the client account - would be needed. Is this not the case?

                      Comment


                        #12
                        Sometimes the RMC owns the freehold and it will receive ground rents which should be kept separately but in most cases, all income and outgoings will relate to the service charges and the one bank account will suffice.

                        Comment


                          #13
                          Originally posted by eagle2 View Post
                          Sometimes the RMC owns the freehold and it will receive ground rents which should be kept separately but in most cases, all income and outgoings will relate to the service charges and the one bank account will suffice.
                          Ah ok...now I understand. Thanks. In this case the RMC doesn't own the freehold (that might change soon though) and - I assume - the freeholder will collect these directly from leaseholders in future. At the moment the freeholder and the property manager are one and the same person, so we get combined ground rent/service charge invoices.

                          One bank account it is then

                          Comment


                            #14
                            Ground rent and service charge demands cannot be combined, because there is a statutory format for ground rent demands, which can only contain the ground rent amount.

                            They might accept a single combined payment, as that reduces bank charges.

                            Comment


                              #15
                              There should be no bank charges with a client bank account

                              Comment

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