When is the invoice charged to the leaseholder?
Leaseholders have the right to require the Freeholder to provide reasonable facilities to inspect the accounts, receipts and other documents that justify the landlord’s service charges.
My question is: how can the leaseholder synchronise these accounts, receipts, invoices, etc, with a particular service charge item?
Does the landlord have to charge them to the leaseholder according to the service charge period when he received the invoice, or when he paid it, or in the period to which the invoice referred (e.g. communal utility invoice)?
This question is not about how long (18 months) the landlord is allowed to delay the service charge, but about how the leaseholder can check from the invoices, receipts, etc that the service charges add up correctly.
Many thanks
Hugh
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Member Since February 2011 - Comments: 3453 - Articles: 286
9:40 AM, 13th June 2025, About 11 months ago
To effectively cross-check what you’re being charged for, the documents the landlord provides need to show three critical pieces of information for each transaction:
Date on the invoice (the service period covered)
Date the invoice was received by the landlord (accounts entry date)
Date the invoice was paid
However, whether a cost can be included in a specific service charge period depends on the accounting basis the landlord uses (usually dictated by the lease or their custom practice):
Three ways service charge costs might be assigned to a period:
Accrual Basis Charge allocated based on when the service was performed or period covered by the invoice. Utilities, ongoing contracts (e.g. cleaning, gardening)
Cash Basis (when paid) Charge allocated in the period payment is made. Simpler schemes or small landlords
Invoice Date Basis (when received) Costs included in the period the invoice is received, not necessarily when paid. Often used if accounts are prepared in line with when bills arrive
Most leases and RICS Service Charge Residential Management Code recommend an accrual basis — charging according to the period the cost relates to
Section 21 & 22 of the Landlord and Tenant Act 1985: Gives leaseholders the right to inspect documents and challenge them.
RICS Code of Practice (3rd edition): Encourages clarity, consistency, and use of accrual basis.
Member Since January 2015 - Comments: 1450 - Articles: 1
1:23 PM, 13th June 2025, About 11 months ago
Your lease should tell you.
The building that I’m a joint freehold of the annual accounts are cash basis1st Jan to 31st December. Service charges are set at the AGM annually, ours have not increase since a few years before Covid. During Covid we actually reduced the monthly.
If major works are needed and not covered by what’s in the kitty we raise the money from Leaseholders (ie all of us) using a s20 Opt-Out agreement and the equal shared amount is then requested/demanded by a date prior to the works being commenced.
Member Since November 2022 - Comments: 2
7:15 PM, 13th June 2025, About 11 months ago
Thanks very much. The RICS recommendation seems the best.
Member Since November 2022 - Comments: 2
1:58 PM, 30th June 2025, About 10 months ago
Reply to the comment left by Neil Patterson at 13/06/2025 – 09:40
Neil
re your answer above: I looked in the RICS Service Charge Residential Management Code 3rd Edition 2016 but find no mention of the Accrual Basis that you said is recommended in that document. Can you cite a specific reference in this RICS docment (link below) or elsewhere?
https://www.rics.org/profession-standards/rics-standards-and-guidance/sector-standards/real-estate-standards/service-charge-residential-management-code