Service Charge Arrears

Our service includes the recovery of arrears of residential service charges and insurance following default by the tenant/leaseholder as well as allowable client administration charges.

We are able to act in almost every instance on a no recovery no fee basis: As such it is rare that our clients are required to make any payment on account of any legal costs or court or Land Registry disbursements as all costs are ordinarily recovered from the late paying leaseholder.

It is crucial to the efficient running of any property management company that there is a constant review of risk and credit control issues and also a quick and efficient recovery of outstanding arrears of services charges. Without adequate controls, management companies can find themselves under pressure from creditors who have supplied services and utilities to block-managed residential units.

This type of creditor pressure can be avoided if the services of specialist managing and solicitor agents are employed. This will ensure that recoveries are made promptly and avoid or ease any cashflow difficulties which managing agents and resident management companies may otherwise experience.

SLC solicitors is able to provide a fast and efficient collection of arrears of service charges and on a no recovery no fee basis with absolutely no upfront charges to our clients.

How to instruct us?

Essentially very little information is needed to commence the recovery process.

If the residential unit or block is a new instruction to SLC we would request from you, or the Land Registry, a copy of a lease (or a proforma lease where the same lease applies across the relevant estate). This will enable us to discover whether we are able to act on a no recovery no fee basis and recover our fees from the leaseholder.

In addition to this we will require a schedule of the tenant's indebtedness confirming the dates upon which the amounts owing fell due, the periods to which the demands relate and details of the leaseholder's leasehold address, and where relevant, if the leaseholder is not resident at the leasehold address (for example, buy-to-let landlords), a further correspondence address.

The required information is summarised as follows:

  1. statement of arrears of service charges, ground rent, insurance, client administration charges etc.
  2. leasehold address
  3. correspondence address if different from leasehold address
  4. copy lease (usually one per block)

who pays for our services?

Dependant upon the terms of the lease it is generally the case that we are able to recover our fees directly from the leaseholder. It is because of this that our clients are rarely required to pay any monies to us in respect of the instructions we carry out on their behalf.

It is commonplace within a modern lease to allow for late payment interest to be charged against any overdue monies including rent and services charges. The vast majority of residential leases define service charges as rent and because of this interest can be charged on arrears.

Typically the interest we are able to recover due to late payment ranges from the Bank of England base rate up to 12%.

If the lease does allow for interest recovery we ensure that the late paying leaseholder is made aware of this and must pay interest to the date of settlement unless our client confirms otherwise. In relation to those cases where arrears have been outstanding for substantial periods of time the accrual of interest can be significant – and recoverable.

For our resident management company clients this element of recovery is a significant reason as to why our services are employed in addition to the pace at which we are able to turn arrears into deposits.


SLC Solicitors are able to offer a no recovery no fee option with absolutely no upfront charges to all our clients to minimise our clients' exposure to legal costs subject to the following criteria being met:

  • the leasehold title is registered;
  • the property is mortgaged to a financial institution such as a bank or building society;
  • there is a forfeiture clause present in the lease;
  • the lease allows for the recovery of professional legal fees;
  • no genuine dispute exists.
  • the unpaid amount is more than £350 or consists of, or includes an amount that has been outstanding for more than 3 years.

It is usual for all these criteria to be met and when we do act on such a basis all fees are paid by the leaseholders thereby easing any demands on the managing agents or resident management companies to fund recovery actions commenced by solicitor agents.

On the rare occasion when a service charge is disputed on the grounds of reasonableness or otherwise it would ordinarily be the case that we would agree a separate charging structure with our clients but this is dependent on the nature of the dispute and its complexity.


(court and land registry charges)

On occasions we will need to undertake searches at the Land Registry to confirm ownership of the leasehold property and to establish whether there is an existing mortgage/charge registered against a property.

The cost of a Land Registry search is relatively minor and in any event these costs are ordinarily recoverable from the late paying leaseholders. When it is necessary to undertake searches at the Land Registry we will usually ensure that these costs are included within our fees which will be recoverable from the leaseholder.

Some mortgagees with existing charges registered against properties will on occasions insist that the landlord or resident management company must obtain a court order, or court declaration in accordance with section 81 of the Housing Act 1996, before considering whether as the chargeholder it will make a payment to settle any outstanding arrears on behalf of its mortgage account holder.

In the event it is necessary to issue court proceedings we would ordinarily request that the court issue fee is paid by our client in advance of any commencement of proceedings. However, when a claim is successfully pleaded and the court grants the appropriate order it is usual that the order will require the court issue fee to be paid by the late paying leaseholder along with the arrears, late payment interest, our clients' administration charges and our legal charges to date.

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