Question: What is the difference between “in” and “with”?
Answer: Quite a lot when it comes to the 3rd RICS Service Charge Residential Management Code.
There was a subtle change between the draft 3rd Residential Management Code and the final Code that was released on 1st June 2016. However, it appears that this change has been missed by most observers, even though the change is of significant importance to Managing Agents, as it affects how they fulfil their obligations under the 3rd RICS Code.
The section of the Code to highlight is Section 3.6 – OTHER INCOME. This concerns the annual declaration that Agents now have to make to clients with regards to their management and includes income received from insurance, fees and commissions. With respect to this, the draft code states, “….The amount of the income should be declared as a note in the Service Charge accounts.” However, in the final version of the Code, Section 3.6 states “…. The amount of the income should be declared annually with the year end service charge accounts”.
The intention of the change is clear. The onus is now on Managing Agents to prepare a standalone statement to be issued with the service charge accounts. There is no requirement in the Code to include this statement as a note to the accounts. Managing Agents will now need to give some thought to the form that this statement is going to take, as will professional bodies such as ARMA.
A similar change in emphasis has also been made with regards to declaration to clients and leaseholders of connections with companies, contractors or suppliers (Section 10.1 of the 3rd RICS Code). This declaration now has to be made outside of the year-end service charge accounts and not as a note to the accounts as was intended in the final draft of the Code.
I am very disappointed by these changes. At Haines Watts the service charge team believes that the best and simplest way to present this information is within the year-end service charge accounts. Please contact us if you wish to discuss this further.
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