The government expects Housing Associations to find new ways to improve their efficiency through savings.
Done properly, maximising service charge recovery can be a relatively quick win to help you do this - provided that your fundamental building blocks are in place.
You can have the best systems and the best software, but if your leases and your tenancy agreements don't give you a clear right to charge for the services that you are providing, you will have one hand tied behind your back in trying to maximise your service charge recovery.
This is because of the key legal principle that service charge provisions must clearly set out what services a tenant has to pay for, and that any uncertainties will be decided in favour of the tenant.
You might say that this is what you pay your lawyers for - and we agree.
Before instructing your lawyers to carry out a sale, check what your standard leases and tenancy agreements say about service charges. This is especially important if they have been drafted by different lawyers over the years, and where you have inherited leases from other organisations, such as following mergers and LSVT's.
In particular, ensure that your leases and tenancy agreements contain the following:
You may already have good training in place for your leasehold and service charge teams.
That is fine, but what training does your Income team receive on recovery from your leaseholders and do they understand the importance of forfeiture in your legal armoury, even just as a threat?
Review what training on drafting and negotiating service charge provisions your Development and Sales and Finance teams have received in the past six months. Were they in the same room as your leasehold and service charge teams when they received it? In our experience, training needs to be practical and joined up to get the most out of it.
We believe that these three fundamental building blocks can help make a positive difference to your bottom line and would be happy to discuss them further with you. We are also able to offer a number of options to help you achieve them, including fixed fee products to give you budget certainty, as well as sharing risk with you by agreeing payments by results.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com