The importance of good communication

Throughout this time residents have provided a multitude of reasons as to why payment has not been made. Some were unaware they had to pay service charge and weren’t notified at the point of sale; many simply forgot or claimed not to have received demands.

Excuses for non-payment have included some very interesting ones, such as: “The Queen was residing in the residents back garden, had been taken ill and the magnetic force field around her house had prevented her from making payment”.

Residents still give the odd imaginative reason for non payment but in recent years the recession has been a huge factor, and to a greater extent residents have actively begun to withhold payment because the demands they have received are not set out in accordance with legislation, Section 20 consultation has not taken place and/or they are unhappy with the service that they have been provided.

Put simply, residents are more informed than they ever have been. Aware of the duties landlords and managing agents are legally bound to undertake, they are content to withhold payment until the issues they have raised are remedied.

Obviously these payment delays can be extremely detrimental, cause huge financial strain on the managing agent to carry out management company tasks and at times put whole developments at risk.

A service based on effective communication delivers the best results. It is imperative that residents are made aware at the outset that service charge arrears are classed a ‘priority debt’ (as defined by the Citizens Advice Bureau) and should be treated in the same vein as mortgage or council tax repayments.

The disputes and concerns raised should be listened to, and those that are invalid should be filtered, and the reasons for this explained. Where the dispute raised may be valid, negotiations with the resident and client should take place in order to find a satisfactory resolution.

Where possible, clients should consider payment plans in an attempt to avoid litigation. This strategy can prove very successful, often resulting in a majority of arrears being paid without the need for legal action, and without any cost being paid by the management company, landlord or managing agent.

The trend of non payment is likely to continue to rise over the forthcoming months, potentially dramatically when interest rates rise. Managing agents and freeholders should double check the processes they have in place and ensure there is an effective platform for communication between them and the resident.