The Managing Agent's Service Charge Compliance Checklist (2026)

TL;DR: Managing agent service charge compliance comes down to four things you can evidence to your client directors: demands that meet the statutory requirements, Section 20 consultation done at the right thresholds, the Section 20B 18-month rule respected on cost recovery, and budgeting consistent with the RICS Service Charge Residential Management Code 4th edition, in force since 7 April 2026. This checklist walks through each step so you can show a board exactly what they are paying for.

See how Brocade handles service charge compliance →

You manage the block. The directors hold you to account. The leaseholders pay the bills and, increasingly, ask to see the working. The service charge is where all three relationships meet, and it is the part of the job most likely to end up in front of a First-tier Tribunal when something is unclear.

This is a practical checklist, written for the agent doing the work. It is not a way to catch anyone out. It is a way to evidence good management to the people you answer to, so that when a director or a leaseholder asks whether a charge is right, you can point to the demand, the consultation record, and the budget, and the answer is yes.

Service charge compliance is not one rule. It is four: valid demands, correct Section 20 consultation, the 18-month recovery limit, and budgeting that holds up against the RICS code. Source: Landlord and Tenant Act 1985, s.18 to s.27A.

#Before You Start

Before you run the checklist on a block, pull these together. Most disputes turn on a missing document, not a disputed figure.

• The leases. The lease is the contract. It defines what is recoverable, the apportionment between units, and the accounting dates. Nothing in this checklist overrides the lease, so read it first.
• The current budget and last year's accounts. You are checking consistency, not just arithmetic.
• The demand templates you actually send. Pull a real one, not the master.
• Your contractor list and any agreements running longer than 12 months. These decide whether Section 20 consultation bites.
• The RICS Service Charge Residential Management Code 4th edition. It took effect on 7 April 2026 and is the yardstick a tribunal will measure you against.

Time estimate: about half a day per block for a first pass, less once your templates and records are consistent across the portfolio.

Read the companion explainer on what the RICS code 4th edition changed →

#How Managing Agent Service Charge Compliance Works, Step by Step

Managing agent service charge compliance runs in four steps, and each one produces a record you can hand to a director: a valid demand, a consultation trail, a recovery-deadline log, and a budget that matches the lease. Work through them in order.

#Step 1: Make Every Demand Legally Valid

A service charge demand is only enforceable if it carries its statutory accompaniments. Get the paperwork wrong and the leaseholder can withhold payment even when the charge itself is entirely reasonable.

Every demand in England must include a summary of the leaseholder's rights and obligations under Section 21B of the Landlord and Tenant Act 1985 (Landlord and Tenant Act 1985, s.21B), the landlord's name and address under Section 47 of the Landlord and Tenant Act 1987 (s.47), and an address in England or Wales for the service of notices under Section 48 (s.48).

When you collect charges for an RTM company or a resident management company, that company is the landlord for service charge purposes. Its registered name and address go on every demand, not yours as agent.

If the Section 21B summary is missing, the leaseholder can lawfully withhold the entire service charge until a compliant demand is served. The charge is not cancelled, it becomes payable once you put it right.

Done looks like: a demand template that names the right landlord, carries the Section 21B summary, states the Section 48 address, and breaks the charge down by head of cost. Our service charge demand template guide covers each element in detail.

#Step 2: Consult Before You Spend, at the Right Thresholds

This is the step most often misread, and the misreading is expensive. Section 20 of the Landlord and Tenant Act 1985 requires consultation before certain spending. The threshold is measured per leaseholder contribution, not by the total size of the job.

Consultation is required for qualifying works when the amount results in any single leaseholder's contribution exceeding £250 (Service Charges (Consultation Requirements) (England) Regulations 2003, reg 6). For a qualifying long-term agreement, consultation is required when any one leaseholder's contribution exceeds £100 in a 12-month accounting period (reg 4).

The Section 20 trigger is the individual leaseholder's contribution, not the headline cost of the works. A £20,000 roof repair split across 100 flats is £200 each and falls below £250. The same repair split across 40 flats is £500 each and must be consulted on.

That distinction is the whole point. Run the per-unit number before you decide whether consultation applies. If you get it wrong and skip consultation, recovery is capped at £250 per leaseholder for the works, or £100 for the agreement, regardless of what you actually spent.

Where genuine urgency or a small leaseholder group makes full consultation impractical, you can apply to the First-tier Tribunal for dispensation under Section 20ZA (s.20ZA). Dispensation is about the process, not the price: the tribunal can excuse the consultation steps, but the charge still has to be reasonable.

Done looks like: a record, per block, of which contracts and works crossed the thresholds, the notices issued, the observations received, and your responses. That record is your evidence the money was spent properly.

See how Brocade handles service charge compliance →

#Step 3: Respect the 18-Month Cost Recovery Limit

Costs do not stay recoverable forever. Under Section 20B of the Landlord and Tenant Act 1985, if a cost was incurred more than 18 months before you serve the demand, the leaseholder is not liable for it (s.20B).

There is one way to preserve recovery on a cost you cannot yet demand. Within 18 months of incurring it, notify the leaseholder in writing that the cost has been incurred and that they will be required to contribute through the service charge. That written notice keeps the cost live.

A worked example. A contractor invoices for major works in January 2026 but the final account is not settled until late 2027. If you wait and demand in 2028 without notice, the cost is more than 18 months old and is lost. If you sent each leaseholder a Section 20B notice in mid-2026 stating the cost was incurred and would be charged, you have protected recovery.

Done looks like: a dated record of when each major cost was incurred, and either a demand served within 18 months or a Section 20B notice on file. For agents handling drawn-out major works, this is the single most common avoidable loss.

#Step 4: Budget and Report to the RICS Code 4th Edition

The RICS Service Charge Residential Management Code 4th edition is the professional standard you are now measured against. It took effect on 7 April 2026 and is approved by the Secretary of State under section 87(7) of the Leasehold Reform, Housing and Urban Development Act 1993.

Following the RICS code is not itself a legal duty, but as an approved code it is admissible in evidence. A First-tier Tribunal can weigh your compliance, or your non-compliance, when deciding whether a charge stands.

In practice the code expects a clear annual budget set before the charge year, transparent apportionment that matches the lease, prompt and itemised accounts after year end, and service charge monies held in a designated client account separate from your own funds. None of this is new to a competent agent. What is new is that it is now the explicit benchmark, so the gap between doing it and evidencing it has closed.

The code also flags four service charge reforms coming under the Leasehold and Freehold Reform Act 2024: a ban on insurance commissions in the charge, a standardised service charge format, annual service charge reports with an account statement for blocks of four or more dwellings, and a leaseholder right to request service charge information. These sit in Part 4 of the Act, which is on the statute book but not yet commenced (Leasehold and Freehold Reform Act 2024, Part 4). Treat them as the direction of travel to design your reporting for, not rules to apply today. The companion piece on the RICS code 4th edition covers these in full.

Done looks like: a budget, a set of accounts, and a client account arrangement you would be comfortable putting in front of a director or a tribunal without explanation.

#Common Mistakes to Avoid

• Measuring Section 20 against the total job, not the per-leaseholder contribution. This is the costliest error in the list. Always divide by the number of contributing units before deciding whether to consult.
• Sitting on major works costs past 18 months with no Section 20B notice. Settled final accounts on long jobs are the usual victim. Diarise the 18-month point when the cost is first incurred.
• Putting the agent's name on the demand instead of the landlord's. For an RTM or RMC block, the company is the landlord. The wrong name is a defective demand under Section 47.
• Treating the LAFRA 2024 transparency reforms as already in force. Part 4 is not yet commenced. Design for it, but apply the existing Landlord and Tenant Act 1985 regime today.
• Holding service charge funds in a general account. Client money should sit in a designated account, ring-fenced from your own. It is both a regulatory expectation and the cleanest answer to a director who asks where the money is.

#Checklist

Print this and run it per block.

• Lease read; recoverable heads, apportionment and accounting dates confirmed
• Demand carries the Section 21B summary of rights and obligations
• Demand states the correct landlord name and Section 47 and 48 addresses
• For RTM/RMC blocks, the company (not the agent) is named as landlord
• Per-leaseholder contribution calculated before deciding on Section 20 consultation
• Consultation run, or Section 20ZA dispensation obtained, for works over £250 per leaseholder
• Consultation run for qualifying long-term agreements over £100 per leaseholder per year
• Each major cost dated; demand served within 18 months or a Section 20B notice on file
• Annual budget set before the charge year and apportioned to the lease
• Service charge funds held in a designated client account
• Budget, accounts and consultation records ready to show a director on request

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#Questions

What is the managing agent service charge compliance checklist for 2026? It covers four things in order: valid demands carrying the Section 21B summary and the Section 47 and 48 landlord details, Section 20 consultation at the correct thresholds, the Section 20B 18-month rule on cost recovery, and budgeting and reporting consistent with the RICS Service Charge Residential Management Code 4th edition, in force since 7 April 2026.

What are the Section 20 consultation thresholds? Consultation is triggered when any single leaseholder's contribution to qualifying works exceeds £250, or exceeds £100 in a 12-month accounting period under a qualifying long-term agreement. The test is per leaseholder contribution, not total project cost (Service Charges (Consultation Requirements) (England) Regulations 2003, regs 4 and 6).

What is the 18-month rule for service charges? Under Section 20B of the Landlord and Tenant Act 1985, costs incurred more than 18 months before a demand is served cannot be recovered, unless the leaseholder was notified in writing within that 18-month window that the costs had been incurred and would be charged.

Does the RICS service charge code apply to managing agents? Yes. The RICS Service Charge Residential Management Code 4th edition applies to any managing agent discharging management functions where a leaseholder pays a variable service charge, as well as to landlords, RTM companies and self-managed RMCs. It took effect on 7 April 2026.

Is following the RICS service charge code legally binding? Following the code is not itself a legal duty, but it is an approved code under section 87(7) of the Leasehold Reform, Housing and Urban Development Act 1993. A First-tier Tribunal can take account of compliance, or non-compliance, when deciding a service charge dispute.

#Further Reading

• What the RICS Service Charge Code 4th Edition Changes. The deeper explainer on the 4th edition and the LAFRA reforms it flags.
• Service Charge Demand Template UK: What Must Be Included. The statutory contents of a valid demand.
• Section 20 Consultation and Building Safety Work. How consultation interacts with safety-driven major works.
• Section 20B Notices and the 18-Month Rule. Preserving cost recovery on long-running works.
• Landlord and Tenant Act 1985, sections 18 to 27A. The primary service charge regime.

This article is for informational purposes and reflects the position in England as of 23 June 2026. It is not legal advice. For advice on a specific block or dispute, consult a qualified solicitor or a chartered surveyor.