The DCLG has published a good practice guidance note for residential tenants who pay service charges where the funds are held on a statutory trust (under section 42 Landlord and Tenant Act 1987). The good practice guide – “Financial Services Compensation Scheme (FSCS) – Treatment of Service charges for residential properties” – deals with the implications of the collapse of a regulated financial institution with whom the trust funds may have been lodged. According to the guidance, “the FSCS would generally expect to treat the tenants (not the landlord) as being individually entitled to the protection available for that proportion of the money in the account to which they are entitled by statutory trust. This would mean each tenant being eligible for a maximum of £50,000 compensation to cover the loss of their particular proportion of the deposited funds.” Note, however, that this is subject to the tenant not having other funds of its own invested in that institution. The guidance is non-binding. It can be view by clicking on: DCLG Service Charge Guidance.
Property PSL