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Failure to serve a right to manage claim notice on a landlord does not always invalidate a claim

Unpaid service charge and major works arrears – what can you do?

Many registered providers (RPs) and local authorities hold a proportion of Right-to-Buy leasehold property as part of their housing portfolios.

As a result, they will have processes in place to collect regular service charge and major works payments from those leaseholders, as and when they fall due.

When leaseholders fail to make those due payments, for whatever reason, debts do of course begin to accumulate. As well as the RP’s cashflow, this can impact other residents on a development; as the sinking fund is depleted the ability to maintain the development to the desired standard can be reduced.

So, what can RPs do in this situation? This is a particularly sensitive issue at the moment as many families have suffered financially during the pandemic and the current significant increases in energy and other costs continue to squeeze family budgets. Whilst some leaseholders may dispute the charges or simply refuse to pay, others may face genuine hardship and be unable to pay.

Our debt recovery team has many years of experience in the recovery of property related debt for both social landlords as well as commercial residential managing agents. Importantly, our team is committed to treating all debtors with respect and fairness. We work ethically and compliantly throughout the recovery process to ensure both our reputation and our client’s reputation are not compromised. In addition, our team is trained to identify vulnerable debtors, be sensitive to their needs and provide any additional assistance that may be needed.

We recently undertook a project for a large RP to recover a debt portfolio of several million pounds relating to unpaid service charge and major works arrears. Some of the arrears owed were historic and had been disputed for some time.

Before we began, we spent a lot of time with the RP to understand its debt portfolio and any areas of dispute that leaseholders might raise. We then agreed a tailored recovery strategy to suit the RP’s specific requirements as well as its debtor demographic.

This was a high-volume exercise that generated significant correspondence as we worked to resolve individual leaseholders’ disputes and other concerns.

To date we have successfully recovered in excess of 70% of the debts referred to us, as well as all of our legal costs. In addition, we have resolved many of these cases without the need for formal litigation.

This has been of great benefit for the RP which is now in a much stronger financial position; having improved its cashflow and written-off those debts which, for economic or other reasons, it does not want to pursue.

Posted:

Your key contact

Philip Roberts

Partner and Head of Debt Recovery

Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton
Phil is a Chartered Legal Executive and Partner in Clarke Willmott’s Debt Recovery team specialising in defended debt recovery litigation and insolvency actions.
View profile for Philip Roberts >

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