Common Problems Facing Residents Management Companies (And How to Solve Them)

You volunteered as an RMC director because nobody else would. Now you're chasing unpaid service charges, trying to understand Section 20 consultation rules, and wondering how year-end accounts are supposed to work — all without training, budget, or a property management background.

These problems are not unique to your block. Every residents management company faces the same set of challenges. The difference is whether you have a system for handling them or rely on guesswork and inherited spreadsheets.

Problem 1: Leaseholders not paying service charges

Arrears are the single most common source of stress for RMC directors. One or two non-paying leaseholders can leave your block unable to pay its insurance premium or fund essential repairs.

Why it happens: Leaseholders dispute amounts, forget to pay, face financial difficulty, or simply don't understand what service charges cover. Some inherited a flat without realising they'd owe hundreds per quarter.

How to solve it:

• Issue compliant demands. Under Sections 47–48 of the Landlord and Tenant Act 1987, a demand must include the landlord's name and address. Without this, the leaseholder has no obligation to pay — and they know it.
• Send structured chase letters. A polite reminder at 14 days, a formal letter at 30, and a pre-action notice at 60 days. Each letter should reference the lease clause and amount owed. Use our free Service Charge Arrears Letter Generator to produce correctly formatted letters with the right legal references.
• Know the 18-month rule. You cannot recover service charge costs demanded more than 18 months after they were incurred, unless you notified the leaseholder within that window. See our guide on the 18-month rule for service charges for the full requirements.
• Understand your escalation options. If letters fail, you can apply to the First-tier Tribunal (Property Chamber) to determine the amount payable, or use the County Court for a money judgment. The FTT route is cheaper and doesn't require a solicitor.

For a full walkthrough of the recovery process, see our service charge arrears recovery guide.

Problem 2: Section 20 compliance for major works

Any work costing more than £250 per leaseholder triggers a mandatory consultation process under Section 20 of the Landlord and Tenant Act 1985. Miss a step and you cannot recover costs above that threshold — regardless of how necessary the work was.

Why it trips directors up: The process has three formal stages with minimum notice periods, and the rules on what counts as a "qualifying long term agreement" versus "qualifying works" are genuinely confusing. Most volunteer directors encounter S20 for the first time when a roof starts leaking.

How to solve it:

• Learn the process before you need it. Read our complete guide to Section 20 consultation now — not when you're standing in a flooded hallway.
• Map the timeline early. A full S20 consultation takes a minimum of 60-90 days from the initial notice to appointing a contractor. Use our free Section 20 Timeline Calculator to work backward from your target start date and see every deadline.
• Document everything. Keep copies of every notice, every response, and every decision. If a leaseholder later challenges the process at the FTT, your evidence trail is your defence.
• Get estimates right. You must obtain at least two estimates, and leaseholders can nominate their own contractor. Budget time for this — contractors in the residential block space are often slow to quote.

For a detailed breakdown of the legislation behind this, see our guide to Section 20 under the Landlord and Tenant Act 1985.

Problem 3: Finding and keeping directors

Director burnout is the silent killer of residents management companies. The work is unpaid, time-consuming, and frequently thankless. When a director resigns and nobody steps up, the company risks being struck off by Companies House — which creates serious complications for property sales in the block.

Why it happens: Most blocks have 6-20 leaseholders. Of those, perhaps 2-3 are willing to volunteer. Those same people end up doing everything — accounts, contractor management, arrears chasing, AGM organisation — for years.

How to solve it:

• Be transparent about the workload. Publish a summary of what directors actually do (see our RMC director responsibilities guide) so leaseholders understand what they're asking of volunteers.
• Distribute tasks. Not every director needs to do everything. One handles accounts, another manages contractors, a third handles communications. Formal role allocation at the AGM prevents the "one person does it all" problem.
• Make the work easier. The less time each task takes, the less likely directors are to burn out. If generating service charge demands takes an afternoon with a spreadsheet, that's an afternoon a volunteer doesn't have. Our free Service Charge Demand Generator reduces it to minutes.
• Set term limits. Rotating directors every 2-3 years prevents burnout and builds a larger pool of people who understand how the block runs.

Problem 4: Year-end accounts and financial compliance

RMC directors must produce annual service charge accounts and file a confirmation statement with Companies House. The accounts should follow RICS Service Charge Residential Management Code guidance — but most volunteer directors have never seen a set of compliant accounts, let alone produced one.

Why it's hard: The standard format requires an income and expenditure statement, a balance sheet showing reserve fund position, and explanatory notes. Professional accountants charge £500-2,000 to prepare these for a small block. That's a significant chunk of a block's annual budget.

How to solve it:

• Understand the format. Our service charge accounting guide walks through the full annual cycle — budgeting, collection, expenditure tracking, and year-end accounts in the standard format.
• Keep records throughout the year. Year-end accounts are painful when you reconstruct 12 months of transactions from bank statements in January. Track income and expenditure monthly and the year-end becomes a summary exercise.
• Don't forget Companies House. Every RMC must file a confirmation statement annually (£50 online). Miss the deadline and Companies House will send warning notices. Miss it repeatedly and they'll start the strike-off process — which can freeze property sales in your block.

Problem 5: Disputes and poor communication

Service charge disputes, maintenance disagreements, and complaints about how decisions are made are among the most common sources of leasehold property disputes.

Why it escalates: Most disputes start small — a leaseholder questions why the gardening bill increased, or disagrees with a repair priority. Without clear communication about how decisions are made and what service charges cover, small questions become formal complaints.

How to solve it:

• Publish the budget breakdown. Send every leaseholder a clear summary showing each budget category, the total cost, and their individual share. Transparency prevents 90% of disputes.
• Hold an AGM. Even if your lease doesn't strictly require it, an annual general meeting gives leaseholders a forum to ask questions and vote on major decisions. Minutes should be circulated within 14 days.
• Respond to queries promptly. A leaseholder who gets a clear answer within a week rarely escalates. One who is ignored for a month contacts the First-tier Tribunal.
• Know the redress options. Leaseholders can apply to the FTT to challenge service charge reasonableness under Section 27A of the Landlord and Tenant Act 1985. Understanding this process — and being prepared for it — is better than being surprised by it.

Problem 6: Managing contractors without experience

Getting quotes, supervising work, and handling defects requires skills most volunteer directors don't have. Overpaying for substandard work is common. So is underspecifying the job and ending up with a dispute about what was agreed.

How to solve it:

• Always get three quotes. For any work over £250 per leaseholder, you're legally required to obtain at least two estimates under Section 20. Getting three is good practice for smaller works too.
• Put everything in writing. Scope, price, start date, completion date, payment terms, defect liability period. A one-page specification prevents the "that wasn't included" conversation later.
• Check insurance. Any contractor working on your block needs public liability insurance (minimum £2 million for most residential work) and, if they have employees, employers' liability insurance. Ask for certificates before work starts.
• Pay on completion, not upfront. Stage payments are reasonable for large projects, but never pay the full amount before work is finished and inspected.

The common thread

Every problem on this list comes down to the same root cause: volunteer directors doing a professional managing agent's job without the tools, training, or time. The managing agent industry charges £60-200+ per block per month because the work is genuinely complex.

The answer isn't necessarily hiring an agent — many blocks left agents precisely because of poor service or high costs. The answer is having the right systems to make each task faster and less error-prone.

LevyBoard is building guided block management software specifically for volunteer directors — service charge accounting, arrears tracking, Section 20 compliance workflows, and year-end accounts, all at a fraction of the cost of a managing agent.

This guide covers residents management companies in England and Wales. Scottish and Northern Irish leasehold law differs. This is general guidance, not legal advice — consult a solicitor for complex disputes or enforcement action.

Sources

• Section 20, Landlord and Tenant Act 1985 — consultation requirements for major works
• Section 21B, Landlord and Tenant Act 1985 — service charge demand requirements
• Section 27A, Landlord and Tenant Act 1985 — application to FTT for service charge determination
• RICS Service Charge Residential Management Code — best practice for service charge accounting
• LEASE — Redress schemes for property management complaints
• Companies House — Becoming a director of a residents management company