Understanding service charge accounts

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    #16
    Originally posted by AndrewDod View Post
    Ahh yes. One of the great criminal offenses in L&T law that is impossible to actually prosecute in practice.

    They might as well say "Failure to meet these deadlines is a very silly billy thing to do. You might even be sent to the naughty step."
    Hi,

    Yes couldn't agree more having last year when the service charge accounts had been issued again unaudited I sent my managing agent a request under section 22 L&TA 1985 to inspect the invoices, receipts and any other document relevant to the service charge account summary.

    I received a reply stating I as a leaseholder could see maintenance invoices only and that only directors of the RMC could see receipts as this would be a breach of data protection.

    So yes they are very aware that only the LHA can bring a prosecution under the L&TA but try and get them to carry this out.

    Comment


      #17
      Originally posted by ram View Post

      You say you are an RMC, Therefore you have directors, and must have more than one director ( two minimum )
      Can you give a source for this. I'm not aware of any prescribed Articles for RMCs, only for RTMs, and the 2006 Companies Act removed the need to have more than one director, so Companies House are quite happy with only one director registered (they don't, of course, look at the Articles).

      As it happens, our RMC does have an article requiring two. I know of buy out RMCs, with professional managers that only have one director.

      Comment


        #18
        Originally posted by josepha333 View Post
        I received a reply stating I as a leaseholder could see maintenance invoices only and that only directors of the RMC could see receipts as this would be a breach of data protection.
        This is obvious gobsh*te nonsense. The leaseholders pay all the bills. Imagine any other area of life being told that you cannot see the evidence for what you are being charged because of data protection? What data protection?

        Leasehold managing agents deserve their reputation. They haven't a clue. Not a clue.

        It's well recorded that leaseholders get fobbed off, if they are lucky, with annual accounts in the accruals format. I defy any normal citizen to find these documents helpful.

        Where do you go to be 'better informed' on service charge accounts, as Lease said was needed in 2016? The hurdles are:

        -Knowing what service charging is all about -agents pretend it is a really really complex process that they cannot possibly be expected to explain more clearly to the people who pay the bills.

        Knowing the difference between accrual accounting and the cash accounting that most normal people use day to day.

        Knowing how the magic of modern accounting software makes all claims by agents that they can't be more transparent utter tripe.

        Knowing all this by learning a wee bit about accounting for service charges in software that is free for anyone to download use. Bet a jam sandwich of your choice most if not all managing agent accounts staff cannot do double entry book keeping!

        So I had a dream - make a series of layman videos for Landlordzone users that step through entering three annual service charge records onto free accounting software using very simple figures to produce the annual accounts covering the main issues such as surpluses, deficits, accruals, creditors and prepayments.

        GNUCash is a cracking free kit in my opinion. I would recommend it to any RMC or RTM company. Not to replace the agent (you can't replace the accountant anyway) but to counter their gobsh*te with knowledge.

        I've so far completed four of what should end up about a dozen short tutorial videos. Time and laziness is the enemy.

        Given this thread I thought I'd jump in early and link to the first:-

        https://www.youtube.com/watch?v=ph7mvRw6vYQ

        If the other three videos don't appear, search youtube for "MrSoffit".

        Make no claim to slickness but have made an effort. No 'Hey yootubers' . Not expecting topic to go viral. No monitizing potential! All free.
        Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

        Comment


          #19
          Indeed ...... but the very point and purpose of the non-transparency and the ineffective legislation IS to facilitate and to oil the wheels of theft.

          And further to do so in the guise of "protection" (indeed the legislation actually makes it harder to have a system that operates with integrity than would be the case if it did not exist and if contract law applied without any veneer). This is by design.

          That is ultimately what EVERYTHING in the L&T arena at the interface between lessees and FH boils down to, and its raison d'être. Protection for thieves - pure and simple.

          And you are not going to get those profiting from the theft avidly watching your videos and using GNUcash (or conveying the input necessary to allow others to do so).
          The legislators and part of the justice system is in cahoots with the thieves.

          Comment


            #20
            Originally posted by josepha333 View Post
            I sent my managing agent a request under section 22 L&TA 1985 to inspect the invoices, receipts and any other document relevant to the service charge account summary.

            I received a reply stating I as a leaseholder could see maintenance invoices only and that only directors of the RMC could see receipts as this would be a breach of data protection.
            Sorry, need to clarify my reply above.

            If - as I first assumed - you mean receipts for bills paid (not common in my experience, mind) then I see no data protection issue.

            If the agent is referring to 'receipts' from leaseholders - i.e. income receipts, then yes the individual names would be data protected (you can't expect to know who is in arrears unless you are a director of the RMC), but they should simply provide you with total income, removing any identifier columns in the income report that they can get with one mouse click. If they can't they need better software or better training how to use it.

            We recently terminated a high profile RICS/ARMA agent because they claimed for two years to be unable to produce transaction reports even to us as their RTM client. I sent them a suggestion to try the free GNUCash software. They said they were investing 'soon' in the best accounting package available. They had been in business for years! We didn't hang around to find out.

            Lessee invoices are recorded (until paid) in a 'current assets: accounts receivable' account even if the agent has no clue what is happening when they push those shiny keys on their keyboard. There has to be an 'accounts receivable' account. It might be called something else. Just as there has to be a 'current assets: bank account' in the software for each client. This is where the lessee receipts go, and the AR account is double entered to remove the debt. Has to be a current asset bank account. The software cannot work without such accounts. This is why 'general ledger' reports on any of these accounts are one mouse clickable and few tweaks.

            Ask for general ledger reports that remove the flat identifiers. They should be able to print off a html and open it in a spreadsheet and delete the column that shows reference codes for flats. Then send you the spreadsheet or convert to pdf. How much would that cost? Mmm maybe a grand by industry admin fee standards? (These guys get a better hourly rate than the Prime Minister or a Barrister it seems).

            If they can't do spreadsheet or pdfs, link them to the free open source LibreOffice. And the free GNUCash financial package.

            Cut off their excuses. Hopefully, the law will eventually cut off their nonsense. I would not trust the average managing agent to account for my kid's pocket money correctly.
            Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

            Comment


              #21
              Originally posted by MrSoffit View Post
              I would not trust the average managing agent to account for my kid's pocket money correctly.
              Exactly. I have no confidence in my managing agent and would like to see what money actually is in the bank accounts shown in the yearly accounts.

              As for the request to inspect the invoices, receipts and any other document relevant to the service charge account summary I expected to be able to see invoices for cleaning of windows and common areas, grounds maintenance, electricity, repairs and maintenance, etc and yes to see receipts for payments made. What is the problem in supplying these if the work has been done and the bill paid?

              Section 22 gives leaseholders, or the secretary of a recognised residents’ association, the right to inspect accounts, receipts and other documentations relating to a service charge. What does this mean? I see it as meaning everything, as Lease Advisory Service advised me Data Protection only covers personal information and this could be redacted if needed to be.

              As has already been stated managing agents appear to be facilitated by legislation, ARMA, RICS and even those presiding over the tribunals in obtaining money without necessarily providing the service.

              Is there no way of being able to see what actually is in the bank accounts?

              Lastly thanks for the replies and the information and links provided.

              Comment


                #22
                Originally posted by josepha333 View Post
                Is there no way of being able to see what actually is in the bank accounts?.
                All the company accounts (not just property company''s) I've seen have an item on their balance sheet: "cash in hand and at bank". All company accounts have to be accrual accounts, so I don't think service charge accounts being accrual accounts prevents this information being provided. The big difference with an accrual account, is that it may show money owing or due before the paperwork catches up. E.g., if you are paying for common area lighting, there will be a debt for the amount of electricity you have used since the last electricity bill, whereas, with cash accounting, the accounts are blissfully unaware of that looming expense. It can also mean that service charge payments are shown as debts to the freeholder, before they become cash in the bank.

                The big problem I have with accounts prepared by accountants, is that the normal job of an accountant is to reveal as little as possible, without breaking the law, so you may only see expenditure in broad categories.. They don't seem to understand that an RMC should be extremely open.

                The official reason for accrual accounts is so that you cannot hide a poor position by arranging to receive all your big bills the day after the accounting reference date.

                Comment


                  #23
                  If the building has more than 4 leasehold units, you can demand the service charge accounts be audited by a qualified accountant. The service charge accounts are not certified by the Managing Agent.
                  The audited accounts have to be available to leaseholders note later than 6 months after the end of the service charge year. Then leaseholders have the right to make an appointment to inspect the original documents and be allowed to make a photo copy at reasonable charge.

                  Comment


                    #24
                    Yup the theory is nice Gordon. The practice is a different matter altogether. Rights without any teeth, and even the right to the audit, while it appears in codes, has not been properly passed into law.

                    So yes, "can demand" a lot of stuff. Not much you can do if that stuff is not sent/done.

                    Comment


                      #25
                      Exactly as stated by AndrewDod above, I have for three years been asking for my service charge accounts to be audited as per the lease, after last years were not audited again, I submitted a section 22 request to inspect the invoices, receipts and any other document relevant to the service charge account summary.

                      And the reply was as a leaseholder I could only see invoices.

                      The managing agents know there is not a damn thing you can do due to latest tribunal decisions that stated L&TA made the legislative process actionable only by the LHA and as we know most will not even be knowledgeable of this or have resources/will to proceed.

                      They act with a total lack of professionalism even though members of ARMA and RICS most of the time, and of whom they laugh in the face of when it comes to following RICS Code of Practice.

                      Comment


                        #26
                        If you are not allowed to see all the documents and bank statements, you should make a complaiint to your local MP and ask for this to raised before the APPG ( MP Group in Parliament ) for leasehold reform.

                        Comment

                        Latest Activity

                        Collapse

                        Working...
                        X