Ask leaseholders what annoys them most about living in a managed block and the answer is nearly always the same: they don't know what they're paying for. The government has taken note. Under the Leasehold and Freehold Reform Act 2024, new rules on service charge transparency are expected from 2027, including set formats for demands and standardised accounts.
Most of the discussion is about what goes on the demand and into the accounts. For block managers, though, there's a step in between that affects both, which is how the money arrives and whether each payment can be traced to the right flat, the right demand and the right fund.
The payments block managers deal with
A typical block involves several kinds of payment, often from the same leaseholders. Service charges are usually demanded twice a year or quarterly in advance, based on a budget, with a balancing charge or credit once the year's accounts are done. Ground rent comes on its own demand, often once a year. Reserve or sinking fund contributions are set aside for future works and have to be accounted for separately. Major works levies can run into thousands of pounds per flat when a roof, lift or facade needs attention. And there are administration charges for things like consents and copies of documents.
These payments are awkward in a few ways. The amounts are large and irregular, many leaseholders are absent landlords or live abroad, and payments often turn up as bank transfers with no useful reference.
Cards don't really work here. The fee on a large service charge or major works payment adds up, and a chargeback on money the block has already spent causes real problems. Cheques are slow, expensive to process and getting rarer.
What the new rules will change
Part 4 of the 2024 Act sets out measures to make service charges clearer and easier to challenge. After its July 2026 consultation response, the government confirmed it will bring these in through several statutory instruments, with changes expected from 2027. They cover demands in a prescribed form, annual reports for leaseholders, standardised service charge accounts, a set schedule of administration charges and more openness about buildings insurance. Private landlords are expected to get 12 months' notice before the new demand rules apply.
Some dates are still moving, so it's worth keeping an eye on official guidance. The direction is clear enough, though. Leaseholders will see more detail about what they're charged and how it's spent, and managing agents will need records that back that up line by line.
How open banking helps
With open banking, the leaseholder pays straight from their bank account through their banking app. The payment is set up by an FCA-regulated provider and sent over Faster Payments.
Every demand, whether for service charges, ground rent or major works, can carry a pay by bank link or QR code. The managing agent fixes the amount, the payee and the reference, and the leaseholder just checks and approves. Because the agent sets the reference, each payment can be tied to a particular flat, demand and fund, such as the service charge account or the reserve fund. That's the level of detail standardised accounts are likely to need.
There are no card fees, which makes it practical for payments in the thousands. There's no chargeback route either, so a contribution can't be clawed back after the money has been committed to works. Payments arrive within seconds, so the agent knows straight away which flats have paid, and the leaseholder gets a clear confirmation, which cuts down on calls and emails asking whether a payment came through.
Where a lease or agreement allows major works to be paid in instalments, each instalment can go out as its own request with its own reference, so both sides can see how much has been paid.
Bank transfer | Cheque | Card | Pay by bank | |
|---|---|---|---|---|
Who sets the reference | Leaseholder | Nobody, matched manually | Agent | Agent |
Cost on large payments | Low | Processing cost | Percentage fee | Low |
Speed | Same day | Days | After settlement | Seconds |
Can it be reversed later | No | Can bounce | Yes, by chargeback | No chargeback route |
Allocation to flat and fund | Manual | Manual | Partly | By reference |
Getting records ready
Before the new rules arrive, it's worth checking whether every receipt can be traced to a flat, a demand and a fund without detective work, whether reserve fund money is collected and recorded separately from day-to-day service charges, and whether you could show any leaseholder a clear payment history if they asked. If major works are paid in instalments, each one should be tracked on its own. And it's worth asking your software provider now how they plan to handle prescribed demands and standardised accounts.
How Fena helps
Fena is an FCA-regulated open banking provider. Block and property managers use our payment links, QR codes and invoice payments to collect service charges, ground rent and major works contributions directly into the right client or trust account, each with a reference tied to the flat and the fund. The same platform handles bulk payments to contractors and consented bank data for reconciliation.
Common questions
Does it work for right to manage companies and resident-run blocks?
Yes. Pay by bank links don't need specialist software, so they suit RTM companies and smaller resident-run blocks as well as large managing agents.
What about leaseholders who live abroad?
They can pay from any supported UK bank account through their banking app. Leaseholders without a UK account will need another method.
Is it secure?
Leaseholders approve each payment in their own banking app using their bank's security, and never share card or login details with the managing agent.
This article is for general information and isn't legal or regulatory advice. Dates for the Leasehold and Freehold Reform Act 2024 may change, so check GOV.UK for the latest position.
Article by
Gosia Furmanik
CEO and Founder
Published on
