Top reasons service charge arrears occur

Getting to the bottom of why your leaseholder is in service charge arrears can help you to decide on the best course of action.

If you’re a landlord or property management company, receiving your service charge payments on time is important to your cash flow. And retaining good cash flow is essential, as problems with cash flow can impact the level of service that you’re able to provide.

Understanding the reasons why leaseholders fall into service charge arrears can help you to rectify the problem and put measures in place to avoid it reoccurring.

Here are the three commonest reasons why leaseholders stop paying their service charge.

Dispute over services

Failure to pay service charge can sometimes be a sign that the leaseholder is not happy with the service that they are receiving. Common service charge complaints include, poor quality service, service not fulfilling contract, and delays in repair or maintenance work.

Error

Sometimes when customers fall into arrears on their service charge payments, it is a genuine mistake. Non-payment can occur when the leaseholder fails to receive the request for payment, if they are disorganised, or if there is confusion about when the payment is due.

Client cannot afford to pay

If a leaseholder keeps trying to defer payments or dodge your calls, it could be that they’ve run into some financial difficulty and are struggling to pay. Leaseholders may be willing to agree to a payment plan to help them to get caught up with their arrears.

If you are struggling to recover service charge arrears from a leaseholder, our SCAR servicemay be able to help you to recover the funds quickly with no up-front costs and no legal action.

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