Question 1

Request for inspection of service charge accounts and supporting documents

Accepted Answer

Q: Would you be kind enough to share the below draft email with one of your honorary consultants (preferably a leasehold lawyer) to ask them for thoughts/feedback/suggested amendments/additions/deletions? This is really our RTA’s attempt to begin an FTT challenge in earnest, as the developer-controlled RMC and managing agent continue to withhold a lot of the service charge information/access we believe we are entitled to. Is it possible to speak with a legal adviser or be appointed one of your experts to guide us through this process as a sort of trusted adviser?

CONFIDENTIAL: DRAFT ONLY

Recognised Tenants’ Association (RTA) Request for inspection of service charge accounts and supporting documents – Section 22 of the Landlord and Tenant Act 1985

We are the Recognised Tenants’ Association (RTA) for out development. We make this request of the Directors of the landlord, RMC and managing agent, in accordance with Section 22 of the Landlord and Tenant Act (LTA) 1985.

The RTA and individual leaseholders at the development have for several years attempted to exercise their legal rights to inspect the service charge documents and supporting information. However, it is with regret that we note that the access and information we have requested has still not been provided. Hence, this is a formal request for the landlord/RMC/managing agent to provide the last five years’ worth of accounts and supporting documents electronically.

When the RTA has raised numerous concerns over service charges, the RMC and managing agent have advised us to challenge at the First Tier Tribunal (Property Chamber) (FTT). At the same time, the managing agent has cited COVID-19 restrictions as a reason not to make facilities available to leaseholders to inspect the accounts for two months, as stipulated by Section 22. To overcome this Catch-22, we request that you provide the requested documents by zip file or access to a shared electronic folder or drive. RICS, ARMA and the FTT have supported and encouraged the electronic sharing of documents during COVID, and we sincerely hope that you will agree to this practical solution to facilitate information-sharing and transparency, particularly as the managing agent is ARMA-Q accredited.

If the requested accounts and supporting documents are not provided within one month (i.e. by COB 16 January 2022), the RTA will apply to the FTT to obtain an order for their release. We believe that the FTT is unlikely to look favourably on the landlord, RMC or managing agent if the RTA is forced to take this route to access the requested information. Please note that a person who, without reasonable excuse, fails to perform a duty imposed on them under Section 22 of the LTA 1985 commits a summary offence and is liable on conviction to pay a fine not exceeding level 4 on the standard scale.

The service charge accounts and supporting documents provided should be clear and transparent, disclosing an audit trail showing the basis upon which the services were considered necessary; the process of commissioning, including a tendering process or a clear explanation as to why tenders were not obtained if that is the case; the basis of any estimated cost; the computation of the final cost; and a statement reflecting quality control and satisfactory completion.

We are requesting the service charge accounts and supporting documents for the FYs 2020-21, 2019-20, 2018-19, 2017-18 and 2016-15, specifically:

1. The trust bank statements for each FY, showing the ownership of the account and payments reconciled to all invoices
2. The general ledgers for each FY, reconciled to all invoices, annual accounts and bank statements
3. Communal electricity invoices for each FY, and the meter readings for each period, reconciled to the general ledgers
4. Communal water invoices for each FY, and the meter readings for each period, reconciled to the general ledgers
5. Insurance schedules and certificates for each FY, the commission sharing agreement (CSA), all broker fees and confirmation of payment (bank account, insurance statement etc.), under Section 30A of the LTA 1985. Please note that a person who, without reasonable excuse, fails to perform a duty imposed on them by or by virtue of Section 30A and Paragraph 2 of the Schedule to the LTA 1985 commits a summary offence and is liable on conviction to pay a fine not exceeding level 4 on the standard scale.

1. 1. Invoices for each FY – the total should agree to the general ledgers, signed accounts and bank statements
  2. Receipts for each FY – a sample check will be performed for selected units to verify the amount received. We will provide evidence of permission to reconcile the amount paid by leaseholders and the amount noted in the bank statement
  3. Tenders and quotes for each FY – formal documentation of the process and selection criteria to be included
  4. Commissioning and maintenance/call-out reports for intercom
  5. Commissioning and maintenance/call-out reports for lifts
  6. Commissioning and maintenance/call-out reports for car park and estate gates
  7. Commissioning and maintenance/call-out reports for boilers
  8. Commissioning and maintenance/call-out reports for HIUs
  9. A copy of the void agreement with City & Country
  10. The Health and Safety File, the provision of which is stipulated by the Construction (Design and Management) Regulations 2015.
  11. Details of all administration or other fees not included in the management fees – please include justification of why these are not included in the management fee e.g. clause in the lease
  12. Calculation of service charge apportionment for a sample of flats which we will provide a list of. We will also provide evidence of permission to obtain the individual service charge calculation
  13. Commissioning and maintenance/call-out reports for HIUs
  14. A copy of the void agreement with City & Country
  15. The Health and Safety File, the provision of which is stipulated by the Construction (Design and Management) Regulations 2015.
  16. Details of all administration or other fees not included in the management fees – please include justification of why these are not included in the management fee e.g. clause in the lease
  17. Calculation of service charge apportionment for a sample of flats which we will provide a list of. We will also provide evidence of permission to obtain the individual service charge calculation.
  18. Details of:

18.1 Works reported (when and by whom)

18.2 Works decided to be carried out (if not repair) by whom and why

18.3 Date when work was carried out (as invoice date could be later)

18.4 Description of the works carried out

18.5 If the invoice should have a report this is to be provided

18.6 Any safety-related works must be provided with engineer designs and cost breakdowns

18.7 A copy of mainstay work placement orders for each invoice

FPRA Honorary Consultant Kevin Lever replied: A: There are two responses to the client’s question here.

- 1. 22 Request to be used; and
  2. How the client might seek the information that is beyond the ambit of the request.

S.22 Request Below is the suggested content for the s.22 Request as provided by the Leasehold Advisory Service.

Leaseholder request for inspection of supporting accounts, receipts etc. -section 22 of the Landlord and Tenant Act 1985

To: [insert name of landlord, or agent, or the person who receives rent]

Property Address: [Insert address of flat or house]

- 1. 1. I am/we are the leaseholder(s) of the above property.

OR

I am the secretary of [name of recognised tenants’ association]

This is a recognised tenants’ association for [name of the building]

The leaseholder(s) of the above property within the building has/have consented to this request.

- 1. 1. I/we make this request of the landlord in accordance with Section 22 of the Landlord and Tenant Act 1985
- 1. 1. The landlord has provided a summary of the relevant costs incurred for the period ending (date)
- 1. 1. As the landlord of the property you are required to comply with paragraphs 5 and 6 below.

OR

As the agent of the landlord named as such in the rent book or similar document

Under Section 22(3) of the Landlord and Tenant Act 1985 you are obliged to forward this request to the landlord as soon as may be.

OR

As the person who receives the rent on behalf of the landlord

Under Section 22(3) of the Landlord and Tenant Act 1985 you are obliged to forward this request to the landlord as soon as may be.

- 1. 1. You are required to provide me/us with reasonable facilities free of charge for inspecting the accounts, receipts and other documents supporting the summary, and for taking copies or extracts from them.
- 1. 1. You are required to make such facilities available for a period of two months beginning not later that one month after this request is made.

A person who, without reasonable excuse, fails to perform a duty imposed on them under Section 22 of the Landlord and Tenant Act 1985 commits a summary offence and is liable on conviction to pay a fine not exceeding level 4 on the standard scale

The local housing authority has the power to bring a prosecution.

Signed: [signature of the person(s) giving the request]

Address: [Give the address for future correspondence about this request]

Date:

Plainly, there are various amendments/deletions to be made to the notice least of all that it must be from an individual who is the director or representative of the RA as distinct from an unnamed person. Here the client’s notice should be changed. I have assumed that the client has served a s.21 notice or has otherwise received a summary of the accounts for the last completed financial year and that they plan to serve this s.22 request notice within 6 months of the date of provision of the summary referred to above. If not I refer the client to my previous advice and the process to follow. The request is of course limited to the last financial period and whilst the client can and should ask for more historic information the landlord is not obliged to provide it. The requirement is of course for facilities to be made available at the offices of the agent/landlord to inspect and take copies. What the client is asking for is copies of everything to be provided. This is in part due to the excuse of Covid but also convenience. The agent should comply (in relation to the last years accounts but not in relation to anything older) and will be encouraged by the governing bodies to do so but they do not have to. It is however not a valid excuse to deny access due to Covid if they are also refusing at reasonable cost to provide the information electronically. My suggestion is that the client does two things.

It serves the s.22 request in the form as shown above;
It also seeks in the letter certain other documents.

In relation to 1 above and given 2 also, it is possible that the agent will provide all five years requested. They may only oblige in respect of the last financial year though. If they fail to provide anything and refuse you access/attendance then they will be in breach and you might then look to enforce. Other avenues for further information. There are five points to make here:-

I refer to the points in my last advice about working with the agent and not being seen as adversarial/getting on the board of the management company etc. Either may enable you to access information previously denied;
If that approach fails then look to exercise the right under s.76 - s.80 LRH&UD Act 1993 to a management Audit. The appointed Auditor has similar rights to access all information as you do under section 22 LTA 1985 but he will appear wholly more official and the agent may be less inclined and less able to dis miss the Auditor. This right is usually exercised as a prelim to an application for the right to appoint a manager or RTM but it may be useful to you here. The issue to consider is costs of the Auditor and particularly so if it proves difficult even for them to obtain the information;
You could also look at exercising the right to appoint a surveyor under s. 84 Housing Act 1996. Again, the surveyor has similar rights to you and the auditor as above and the reason for appointing is usually in advance of a fault-based claim for the right to appoint a manager or RTM. As with the above the surveyor may prove to be less easily dismissed. Again though, the consideration for the client is costs as the surveyor will, like the Auditor, expect a fee for their time and that might be sizable depending upon what they need to do in order to be able to report;
Exercise the right to manage - it will not answer questions relating to the past but it will ensure that you are in control for the future - if the leaseholders and the building qualify;
Bring an FTT application in any event for the years about which you have concerns and in doing so use an experienced accountant/auditor/surveyor/lawyer to assist with the claim so that points are not missed. As highlighted before though you need to ensure that

(a) There are not arrears or other breaches that may enable the landlord/management company to impose a personal liability on any leaseholder for the costs of the eventual determination; and

(b) The leases enable the costs of the application to be put to the service charge unless the FTT make a s.20C order preventing the same. In the case of a section 20C order only those parties to the application can benefit from such an order and so the more applicants to the claim the better (the less the landlord can recover from the service charge). This really needs to be the last resort though because in the absence of the requested information you are rather making a claim in the dark.

Draft letter If not apparent from the above the advice is to serve the s.22 in the form as above and not include all of the preamble content of your proposed draft - just serve the request. The letter accompanying the request should include your request for additional information and explain that the request is in fact for the financial periods 2020-21, 2019-20, 2018-19, 2017-18 and 2016-15. Again, I would avoid the preamble content - just a straight letter asking for the information to be provided in zip files or on a download site or at their offices, which ever they prefer. If you attend the offices then ask for copies of everything and pay the copying charges (reasonable or otherwise). You can argue over the reasonableness of the copying charges when you bring your application to the FTT and so you may get some of those refunded if they were excessive. [Question answered in January 2022]

Question 2

Request for inspection of service charge accounts and supporting documents

Accepted Answer

Q: Would you be kind enough to share the below draft email with one of your honorary consultants (preferably a leasehold lawyer) to ask them for thoughts/feedback/suggested amendments/additions/deletions? This is really our RTA’s attempt to begin an FTT challenge in earnest, as the developer-controlled RMC and managing agent continue to withhold a lot of the service charge information/access we believe we are entitled to. Is it possible to speak with a legal adviser or be appointed one of your experts to guide us through this process as a sort of trusted adviser?

CONFIDENTIAL: DRAFT ONLY

Recognised Tenants’ Association (RTA) Request for inspection of service charge accounts and supporting documents – Section 22 of the Landlord and Tenant Act 1985

We are the Recognised Tenants’ Association (RTA) for out development. We make this request of the Directors of the landlord, RMC and managing agent, in accordance with Section 22 of the Landlord and Tenant Act (LTA) 1985.

The RTA and individual leaseholders at the development have for several years attempted to exercise their legal rights to inspect the service charge documents and supporting information. However, it is with regret that we note that the access and information we have requested has still not been provided. Hence, this is a formal request for the landlord/RMC/managing agent to provide the last five years’ worth of accounts and supporting documents electronically.

When the RTA has raised numerous concerns over service charges, the RMC and managing agent have advised us to challenge at the First Tier Tribunal (Property Chamber) (FTT). At the same time, the managing agent has cited COVID-19 restrictions as a reason not to make facilities available to leaseholders to inspect the accounts for two months, as stipulated by Section 22. To overcome this Catch-22, we request that you provide the requested documents by zip file or access to a shared electronic folder or drive. RICS, ARMA and the FTT have supported and encouraged the electronic sharing of documents during COVID, and we sincerely hope that you will agree to this practical solution to facilitate information-sharing and transparency, particularly as the managing agent is ARMA-Q accredited.

If the requested accounts and supporting documents are not provided within one month (i.e. by COB 16 January 2022), the RTA will apply to the FTT to obtain an order for their release. We believe that the FTT is unlikely to look favourably on the landlord, RMC or managing agent if the RTA is forced to take this route to access the requested information. Please note that a person who, without reasonable excuse, fails to perform a duty imposed on them under Section 22 of the LTA 1985 commits a summary offence and is liable on conviction to pay a fine not exceeding level 4 on the standard scale.

The service charge accounts and supporting documents provided should be clear and transparent, disclosing an audit trail showing the basis upon which the services were considered necessary; the process of commissioning, including a tendering process or a clear explanation as to why tenders were not obtained if that is the case; the basis of any estimated cost; the computation of the final cost; and a statement reflecting quality control and satisfactory completion.

We are requesting the service charge accounts and supporting documents for the FYs 2020-21, 2019-20, 2018-19, 2017-18 and 2016-15, specifically:

1. The trust bank statements for each FY, showing the ownership of the account and payments reconciled to all invoices
2. The general ledgers for each FY, reconciled to all invoices, annual accounts and bank statements
3. Communal electricity invoices for each FY, and the meter readings for each period, reconciled to the general ledgers
4. Communal water invoices for each FY, and the meter readings for each period, reconciled to the general ledgers
5. Insurance schedules and certificates for each FY, the commission sharing agreement (CSA), all broker fees and confirmation of payment (bank account, insurance statement etc.), under Section 30A of the LTA 1985. Please note that a person who, without reasonable excuse, fails to perform a duty imposed on them by or by virtue of Section 30A and Paragraph 2 of the Schedule to the LTA 1985 commits a summary offence and is liable on conviction to pay a fine not exceeding level 4 on the standard scale.

1. 1. Invoices for each FY – the total should agree to the general ledgers, signed accounts and bank statements
  2. Receipts for each FY – a sample check will be performed for selected units to verify the amount received. We will provide evidence of permission to reconcile the amount paid by leaseholders and the amount noted in the bank statement
  3. Tenders and quotes for each FY – formal documentation of the process and selection criteria to be included
  4. Commissioning and maintenance/call-out reports for intercom
  5. Commissioning and maintenance/call-out reports for lifts
  6. Commissioning and maintenance/call-out reports for car park and estate gates
  7. Commissioning and maintenance/call-out reports for boilers
  8. Commissioning and maintenance/call-out reports for HIUs
  9. A copy of the void agreement with City & Country
  10. The Health and Safety File, the provision of which is stipulated by the Construction (Design and Management) Regulations 2015.
  11. Details of all administration or other fees not included in the management fees – please include justification of why these are not included in the management fee e.g. clause in the lease
  12. Calculation of service charge apportionment for a sample of flats which we will provide a list of. We will also provide evidence of permission to obtain the individual service charge calculation
  13. Commissioning and maintenance/call-out reports for HIUs
  14. A copy of the void agreement with City & Country
  15. The Health and Safety File, the provision of which is stipulated by the Construction (Design and Management) Regulations 2015.
  16. Details of all administration or other fees not included in the management fees – please include justification of why these are not included in the management fee e.g. clause in the lease
  17. Calculation of service charge apportionment for a sample of flats which we will provide a list of. We will also provide evidence of permission to obtain the individual service charge calculation.
  18. Details of:

18.1 Works reported (when and by whom)

18.2 Works decided to be carried out (if not repair) by whom and why

18.3 Date when work was carried out (as invoice date could be later)

18.4 Description of the works carried out

18.5 If the invoice should have a report this is to be provided

18.6 Any safety-related works must be provided with engineer designs and cost breakdowns

18.7 A copy of mainstay work placement orders for each invoice

FPRA Honorary Consultant Kevin Lever replied: A: There are two responses to the client’s question here.

- 1. 22 Request to be used; and
  2. How the client might seek the information that is beyond the ambit of the request.

S.22 Request Below is the suggested content for the s.22 Request as provided by the Leasehold Advisory Service.

Leaseholder request for inspection of supporting accounts, receipts etc. -section 22 of the Landlord and Tenant Act 1985

To: [insert name of landlord, or agent, or the person who receives rent]

Property Address: [Insert address of flat or house]

- 1. 1. I am/we are the leaseholder(s) of the above property.

OR

I am the secretary of [name of recognised tenants’ association]

This is a recognised tenants’ association for [name of the building]

The leaseholder(s) of the above property within the building has/have consented to this request.

- 1. 1. I/we make this request of the landlord in accordance with Section 22 of the Landlord and Tenant Act 1985
- 1. 1. The landlord has provided a summary of the relevant costs incurred for the period ending (date)
- 1. 1. As the landlord of the property you are required to comply with paragraphs 5 and 6 below.

OR

As the agent of the landlord named as such in the rent book or similar document

Under Section 22(3) of the Landlord and Tenant Act 1985 you are obliged to forward this request to the landlord as soon as may be.

OR

As the person who receives the rent on behalf of the landlord

Under Section 22(3) of the Landlord and Tenant Act 1985 you are obliged to forward this request to the landlord as soon as may be.

- 1. 1. You are required to provide me/us with reasonable facilities free of charge for inspecting the accounts, receipts and other documents supporting the summary, and for taking copies or extracts from them.
- 1. 1. You are required to make such facilities available for a period of two months beginning not later that one month after this request is made.

A person who, without reasonable excuse, fails to perform a duty imposed on them under Section 22 of the Landlord and Tenant Act 1985 commits a summary offence and is liable on conviction to pay a fine not exceeding level 4 on the standard scale

The local housing authority has the power to bring a prosecution.

Signed: [signature of the person(s) giving the request]

Address: [Give the address for future correspondence about this request]

Date:

Plainly, there are various amendments/deletions to be made to the notice least of all that it must be from an individual who is the director or representative of the RA as distinct from an unnamed person. Here the client’s notice should be changed. I have assumed that the client has served a s.21 notice or has otherwise received a summary of the accounts for the last completed financial year and that they plan to serve this s.22 request notice within 6 months of the date of provision of the summary referred to above. If not I refer the client to my previous advice and the process to follow. The request is of course limited to the last financial period and whilst the client can and should ask for more historic information the landlord is not obliged to provide it. The requirement is of course for facilities to be made available at the offices of the agent/landlord to inspect and take copies. What the client is asking for is copies of everything to be provided. This is in part due to the excuse of Covid but also convenience. The agent should comply (in relation to the last years accounts but not in relation to anything older) and will be encouraged by the governing bodies to do so but they do not have to. It is however not a valid excuse to deny access due to Covid if they are also refusing at reasonable cost to provide the information electronically. My suggestion is that the client does two things.

It serves the s.22 request in the form as shown above;
It also seeks in the letter certain other documents.

In relation to 1 above and given 2 also, it is possible that the agent will provide all five years requested. They may only oblige in respect of the last financial year though. If they fail to provide anything and refuse you access/attendance then they will be in breach and you might then look to enforce. Other avenues for further information. There are five points to make here:-

I refer to the points in my last advice about working with the agent and not being seen as adversarial/getting on the board of the management company etc. Either may enable you to access information previously denied;
If that approach fails then look to exercise the right under s.76 - s.80 LRH&UD Act 1993 to a management Audit. The appointed Auditor has similar rights to access all information as you do under section 22 LTA 1985 but he will appear wholly more official and the agent may be less inclined and less able to dis miss the Auditor. This right is usually exercised as a prelim to an application for the right to appoint a manager or RTM but it may be useful to you here. The issue to consider is costs of the Auditor and particularly so if it proves difficult even for them to obtain the information;
You could also look at exercising the right to appoint a surveyor under s. 84 Housing Act 1996. Again, the surveyor has similar rights to you and the auditor as above and the reason for appointing is usually in advance of a fault-based claim for the right to appoint a manager or RTM. As with the above the surveyor may prove to be less easily dismissed. Again though, the consideration for the client is costs as the surveyor will, like the Auditor, expect a fee for their time and that might be sizable depending upon what they need to do in order to be able to report;
Exercise the right to manage - it will not answer questions relating to the past but it will ensure that you are in control for the future - if the leaseholders and the building qualify;
Bring an FTT application in any event for the years about which you have concerns and in doing so use an experienced accountant/auditor/surveyor/lawyer to assist with the claim so that points are not missed. As highlighted before though you need to ensure that

(a) There are not arrears or other breaches that may enable the landlord/management company to impose a personal liability on any leaseholder for the costs of the eventual determination; and

(b) The leases enable the costs of the application to be put to the service charge unless the FTT make a s.20C order preventing the same. In the case of a section 20C order only those parties to the application can benefit from such an order and so the more applicants to the claim the better (the less the landlord can recover from the service charge). This really needs to be the last resort though because in the absence of the requested information you are rather making a claim in the dark.

Draft letter If not apparent from the above the advice is to serve the s.22 in the form as above and not include all of the preamble content of your proposed draft - just serve the request. The letter accompanying the request should include your request for additional information and explain that the request is in fact for the financial periods 2020-21, 2019-20, 2018-19, 2017-18 and 2016-15. Again, I would avoid the preamble content - just a straight letter asking for the information to be provided in zip files or on a download site or at their offices, which ever they prefer. If you attend the offices then ask for copies of everything and pay the copying charges (reasonable or otherwise). You can argue over the reasonableness of the copying charges when you bring your application to the FTT and so you may get some of those refunded if they were excessive. [Question answered in January 2022]

Request for inspection of service charge accounts and supporting documents

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