Swat Uk has reported that many residential management companies (RMCs) are not preparing their accounts correctly, as, in addition to valid company matters such as ground rent, they often include service charge payments, that are items made solely on behalf of the tenants. Service charge monies are held in trust by the company and should be excluded from the statutory accounts. The only way that service charge expenditure can be reported is if it is requested by the tenants or is required by the lease. Despite the advice from the Association of Residential Managing Agents (ARMA) to its members, there is currently no legislation to force the publication of a property’s service charge affairs.
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