Property Notepad - May 2009

2. Impact of Bank failures on residential service charge funds

The meltdown in the banking sector has created huge problems for those with money on deposit.  One such problem arises in relation to funds held in service charge accounts, which can frequently run into hundreds of thousands of pounds. 

The Financial Services Compensation Scheme protects individual depositors up to a limit of £50,000, but residential service charge funds are typically held by a residents’ company, managing agent or similar, and therefore appeared not to qualify for protection under the scheme. 

To address this concern, the Government has published guidance to the effect that residential service charge funds will be treated so that each individual tenant will be able to claim protection up to the £50,000 limit.  Although this guidance does not yet have the force of law, it seems clear that all but the most lavish of service charge funds should be fully protected by the Compensation Scheme. 

Read more...

• Dealing with applications for Landlord’s Consent
• Stamp Duty Land Tax – Disclosure of Avoidance Schemes
• Easements – Can the landowner be compelled to sign a deed?

For PDF version of this notepad please click here