A leading prime central London managing agent faced a significant challenge: over £16 million in outstanding service charge arrears across their extensive leasehold property portfolio. With cash flow pressures mounting and increasing demands for building maintenance and operational costs, they needed a specialist legal partner to deliver an effective arrears recovery process and support them in the recovery of the substantial outstanding arrears.
Brady Solicitors, renowned for their expertise in leasehold property law and service charge recovery, partnered with the managing agent to implement a recovery strategy and develop a proactive process to utilise going forward.
Challenges
The managing agent was dealing with a substantial backlog of service charge arrears, which was impacting the cash flow at a number of their blocks and therefore impacting the service they were delivering. The arrears consisted of both straightforward and defended matters, requiring a tailored legal approach for resolution. Additionally, the managing agent lacked full visibility on the exact arrears positions across their blocks, making it difficult to plan ahead for maintenance and building works.
Brady Solicitors’ Approach
Brady Solicitors worked with the client to establish a tailored recovery process using both the clients’ knowledge of their blocks and Brady Solicitors expertise in service charge recovery. The revised process included strategic early intervention by communicating with leaseholders at the earliest stage to maximise pre-litigation recovery. This included issuing clear, fair and impactful Letter Before Action (LBA) communications, leveraging Brady Solicitors’ knowledge to prompt swift settlements. The litigation management process established was highly efficient, ensuring seamless progression of defended matters while maintaining cost-effectiveness.
To further support the client, Brady Solicitors delivered tailored training sessions on service charge demands, the recovery process, and the management of more complex cases, enhancing the client’s internal knowledge and efficiency. Bradys also created customised reports, offering greater visibility and understanding of arrears positions across developments. These reports provided valuable insights that enabled the client to make informed decisions regarding building maintenance and improvements.
Results
Brady Solicitors achieved remarkable results, recovering over 70% of arrears at the Letter Before Action stage, significantly reducing the need for costly and time-consuming litigation. The average arrears recovery timeframe was just 50 days, even including defended matters. This resulted in a significant improvement in the predictability of cash flow, allowing the managing agent to plan the allocation of funds more effectively for building management and future maintenance works. Additionally, their enhanced leaseholder engagement strategy reduced future arrears through clearer communication and proactive measures.
Brady Solicitors also made improvements to the settlement process, enabling them to supply the managing agent with settlement payments within a matter of days, which was particularly beneficial for challenging developments where service charge cash flow was a regular concern.
Conclusion
By partnering with Brady Solicitors, the managing agent achieved a dramatic reduction in outstanding service charge arrears, stabilised their financial position, and strengthened their long-term arrears management processes. Brady Solicitors’ strategic, results-driven approach, combined with tailored training, detailed reporting, and improved settlement processes, proved invaluable in tackling even the most complex arrears cases.
The continuing partnership between the managing agent and Brady Solicitors will further embed the refined cash flow processes, whilst enabling the process to continually evolve as required with future industry changes. This working relationship also showcases the significant benefits of managing agents and specialist leasehold property solicitors working in partnership to deliver effective and efficient property management to benefit all involved.
For managing agents facing similar challenges, Brady Solicitors offer a proven pathway to securing service charge payments efficiently and effectively. If you have any questions or require assistance with service charge recovery, please can in touch and one of our experts will be happy to help.
