Service Charge: Can’t pay or Won’t pay?

Nobody likes financial surprises - right? But here’s the thing: a service charge should never be a surprise!

Why shouldn’t your Service Charge be a surprise?

The Landlord would be responsible for the maintenance and repair of the building in which any associated costs are recoverable via ‘Service Charges’ and billed to the leaseholders. The details of what is charged would be detailed in each lease, and remember the lease is king!

Trying to get payment for an “invisible” service of benefit is always hard.

Everyone knows, or should know, why they need to pay a service charge, it’s usually written in the lease, which they signed when they bought the property.

But paying into a “sinking fund” for the “just in case” problems that will inevitably go wrong, or the five yearly decoration that needs to be completed is tough for those who aren’t “savers” by nature. These “invisible” benefits need to be paid for, but it’s easy to forget when your other monthly payments for the mortgage, car payment, insurance payment, savings, Netflix, Amazon etc and other monthly commitments are already going out.

What’s going on in the background?

Getting behind with payments is embarrassing, and when people are embarrassed their behaviour can change. It’s not just the actual lack of money that’s the problem. A shortage of money can lead to a massive increase in anxiety. The emotional strain of dealing with debt can be almost as damaging as getting your electricity cut off or having your car repossessed or seeing your credit score plunge to where you’ll never get another loan.

Whatever the cost, whatever the cause, debt wreaks emotional havoc on our psyche. Among the negative effects are low self-esteem and impaired cognitive functioning. Being in debt can lead to denial, stress, fear and panic, anger and depression.

The easiest and most common behavioural trait is ignore it and it will go away, - commonly known as the “ostrich move”. When this happens, we have found that instead of bombarding them with calls, texts and emails the best way, as authentic and responsible Block Managers, is to seek to understand the problem.

We know many would have a debt collector on speed dial - it’s just not our way!

What’s the problem?

We seek to understand first and foremost. There’s usually a good reason why, and we seek to understand the reason behind the non-payment. Is it a case of understanding and coming up with a payment plan that works for everyone?

Don’t get me wrong, we’re not a pushover, we simply use a more flexible and gentler approach to financial challenges.

We really do find out whether it is a case of can’t pay or won’t pay.

The Arrears Process

It’s not a cliche, but we are all human beings and we know that talking is the best approach. So, we start with a phone call and of course we put our communication in writing so there is an audit trail if we ever need it, but our process always starts and ends with a phone call.

Our strategy is simple - talk to us, because our process does not auto generate a debt collector!

Let’s face it, we look after their home, and if their home is their castle, their sanctuary we need to let them know we’re on their side, but we still have a job to do.

As soon as people are “threatened” or feel threatened whether it’s legal action, or a debt collector, then the relationship is failing and likely to be destroyed.

We take the longer-term approach; we want to maintain the relationship and still collect the service charge.

What’s our advice?

• Get your team some great communication training.
• Take a longer-term approach to the debt - it’s a relationship that needs nurturing and support

At Fraser Allen we take a gentler approach, a kinder approach, as we realise there is usually a reason why someone has not paid and we aim to listen, understand and put a payment plan in place. Whenever we have needed to refer the matter to solicitors, it has always been after extensive due diligence over that particular case. Financial matters are something we take very seriously.

If you like the sound of the way we work at Fraser Allen and you’d like your property to be in safe hands, then let’s see how we can support you.

If you are self-managing your block and you'd like some expert help and guidance, drop us a
message or call the office - we'd love to help!