Let’s talk about the unsexy but utterly essential side of property management: financial control.
While glamorous rooftop views and newly painted communal halls steal the spotlight, behind the scenes, there’s one thing that keeps the entire show running smoothly – money. And more importantly, managing it properly. Whether you’re overseeing a modern block of flats or a period conversion by the coast, financial control is the backbone of trust, transparency, and legal compliance in property management.
Why Financial Control Is So Important
- Transparency Builds Trust: Leaseholders want to know where their money is going. Solid financial control means clear, consistent service charge budgets, timely reporting, and zero nasty surprises. Transparency isn’t just good service – it’s your best marketing tool.
- Compliance is Key (and Mandatory): Mismanaging client funds isn’t just a mistake – it can be a breach of trust and in some cases, a breach of law. That’s why managing agents must adhere to strict financial regulations and codes of practice (hello, The Property Institute!).
- Future-Proofing Developments: Sound financial planning ensures there’s enough in the reserve fund for that all-important roof replacement or fire door upgrade. No one wants an emergency levy – not your leaseholders, and definitely not your inbox.
- Professionalism Shines Through: Well-managed funds are a sign of a well-run block. When service charge accounts reconcile, budgets are accurate, and arrears are chased professionally, residents feel the difference – and word spreads.
Holding Funds in Trust – Yes, It’s a Legal Thing
Ever heard the phrase “not your money”? That’s exactly how client funds work. As a managing agent, you’re holding money on trust for someone else – typically the residents, RMC, RTM, or freeholder. And yes, there are rules.
Here’s the need-to-know:
Trust Accounts Are a Must
Under Section 42 of the Landlord and Tenant Act 1987, service charge monies must be held in a designated trust account. This means:
- Separate from the managing agent’s company funds
- Identifiable to the specific building or development
- Interest (if earned) belongs to the client, not the agent
Use One Account Per Property
Don’t mix the money. Each development should have its own ring-fenced account. This keeps things clean, clear, and audit-friendly.
Annual Reporting Is Non-Negotiable
You must prepare service charge accounts annually, showing all income and expenditure. Many leaseholders have the right to inspect vouchers, and accounts should be prepared following best practices, ideally by an independent accountant.
Client Money Protection (CMP)
If you’re a managing agent, you must be part of an approved Client Money Protection Scheme like TPI. This ensures leaseholder funds are safeguarded, even if things go wrong.
Financial Control, the Fun Way?
Okay, we admit – “budget reconciliation” doesn’t scream Friday night fun. But think of it this way:
- A well-budgeted block means no awkward AGMs
- On-time payments = happy contractors = faster service
- Clean accounts = better resale values
- And most importantly, financial control gives you peace of mind
At Levels Property Management, we take your trust seriously. That’s why every pound and penny is accounted for, every transaction is traceable, and every client account is treated like Fort Knox (with better software).
Want to know more about how we manage your money? Drop us a line. We’re always happy to chat property, planning, and pounds.
