Block and service charge

If your agency manages a block of residential properties or a commercial property with several flats, shops, or units, the steps below will show you how to set this up in Alto.

First, create a Head property and associate it with the Management Company. The Head property will store documents and certificates for the building, along with reminder dates for fire safety, AGM, etc. Any supplier invoices, management fees, and building insurance, for the block are charged to the Head property and paid from the Service Charge monies collected.

The Head property is cloned to create all additional flats, offices or shops within that block. The Leaseholder of each flat is then created as a Tenancy and a charge is raised for the collection of their service charge. When the leaseholder pays their service charge, it is receipted and held in the Management Company.

This article includes: 

• Add a Head property and the associated flats, shops and townhouses
• Edit the Management Company
• Add a Leaseholder
• Set up the Service Charge invoice
• Management fee and supplier expenses (grounds maintenance, common area repairs)
• Produce a management income and expenditure report
• Reconcile the Management Company bank account

Add a Head property and the associated flats, shops and townhouses

A Head property is created for deducting any maintenance invoices, insurance, and your management fees. 

In the case of block management, the landlord record is the Management Company, where Service Charge money collected from the Leaseholders is held, then used to pay any invoices and fees.

The name of the Management Company should be the block name, followed by the Management Company, i.e. Regency House Management Company.

1. First, add the Head property record
   For more information on Adding a new property, click here
2. Then, make changes to the Head property record as follows:
   Click Appraisal on the side menu
   1. Click the Pre Appraisal tab to edit the property address by adding the word HEAD after the street name. This identifies the property in which maintenance invoices, reminder dates for fire safety, and corresponding certificates and documentation are recorded
   2. Click the Post Appraisal tab. In Proposed, type £1. In Management Type, select Part Managed. Edit the Letting Fee and Management Commission to 0
3. Click Actions
4. Click Instruct, then click OK
5. Click Property on the side menu
6. Click the Client Accounts top tab
7. Click Select Bank Accounts
8. Select the account in which Service Charge money is collected, and remove any unwanted bank accounts
   For more information on Setting up additional bank accounts, click here
9. Click Management on the side menu
10. Click the Dates top tab
11. Set the Next Due Date for the Fire Safety expiry, AGM, and any other dates which are relevant to the block
    For more information on Adding a date to a property, click here
12. Click Media on the side menu
13. Click the Other Files top tab
14. Upload copies of corresponding certificates for later reference
    For more information on Uploading documents to a property, click here
15. Click Save

Add Flats, Shops, Townhouses

After the Head property has been added, it can be cloned to add each of the flats, shops, townhouses, in the block.
For more information on Cloning a property, click here

Make changes to each property record as follows:

1. Click Appraisal on the side menu
   1. Click the Pre Appraisal tab to edit the property address by adding SC at the end of the street name. This identifies the property is set up with a Leaseholder for collecting Service Charge payments
   2. Click the Post Appraisal tab. In Rental Freq, add the frequency in which the service charge amount is collected. In Proposed, type the amount of the Service Charge. In Management Type, select Part Managed
2. Click Actions
3. Click Instruct, then click OK
4. Click Property on the side menu
5. Click the Client Accounts top tab
6. Click Select Bank Accounts
7. Select the account in which Service Charge money is collected, and remove any unwanted bank accounts
   For more information on Setting up additional bank accounts, click here
8. Click Overview on the side menu
9. Click Portal Publishing
10. Ensure Include all portals/Include is unticked so it doesn't upload to the portals. If you do need to untick, click Update portals to confirm the property isn't uploaded
11. Back on the Overview, click Actions
12. Click Change Status and select Available

Edit the Management Company

Once you have added the Head property, make changes to the Management Company record as follows:

1. Click Contacts on the main toolbar
2. Select the relevant contact from Recent & Favourite Contacts
   1. Alternatively, find the contact using the Search Contacts bar in the top right
3. Click Contact on the side menu
4. Click the Payment Groups top tab
5. The Head property and all flats, shops and townhouses, will be listed in the Default Payment Group. Click the cog to Configure Payment Group settings
6. Tick Retain ALL. This is important as the management company funds are never paid out
7. In Payment Method, select Internet from the dropdown menu
8. Click Save
9. Click the Client Accounts top tab
10. Click Select Bank Accounts
11. Select the account in which Service Charge money is collected, and remove any unwanted bank accounts
    For more information on Setting up additional bank accounts, click here
12. Click Save

Add a Leaseholder

The owner of each flat, shop, etc is set up the same as you would create a tenancy.
For more information on Creating a joint tenancy, click here

Once the process is in Progressions, you can then Edit Tenancy Details:

1. Click Progressions on the main toolbar
2. Click All Lettings
3. Select the property in which you're adding the Leaseholder
4. Click Edit Tenancy
5. The Tenancy Details open
   1. Edit the Contract type to the most suitable option
   2. Edit the Start Date to the next date in which the Service Charge is due to be paid
   3. Edit the Term to the remaining period in the financial year for that block
   4. Select the correct Rental Frequency which the Service Charge payments are due
   5. Edit the Rental Amount to the amount the leaseholder pays per term
   6. In Deposit Required, type 0
   7. For Deposit Scheme, click No Deposit Held
6. Click Save
7. Click Actions
8. Click Finalise Let
9. Untick when prompted to Update Tenant Address
10. Delete all Rent Charges that appear

Initial settings on a Leaseholder

Now, set the Notice Address that will appear on Service Charge invoice and label the record as a Leaseholder.

1. Click Tenancies on the main toolbar
2. Select the relevant leaseholder from Recent & Favourite Tenancies
   1. Alternatively, find the leaseholder using the Search Tenancies bar in the top right by entering either the leaseholder name or the property address
3. Click Tenancy on the side menu
4. Click the Details top tab
5. Using the dropdown menu, set the Notice Address to the preferred option
6. In Our Ref, type Leaseholder
7. Click Save

For the Contact delivery method:

1. Whilst on the Tenancy Overview screen, click the leaseholders' name to take you to the leaseholders' Overview screen
2. Click Contact on the side menu
3. Under Account Delivery Method, tick the applicable delivery method(s) that you wish to send out, receipts and chase late payments 
4. Click Save

Change the Leaseholder to a Periodic Tenancy

As the Leaseholder is responsible for the Service Charge payments until they sell the property, you should change the tenancy to a Periodic term.
For more information on Changing a tenancy to periodic, click here

1. When the Charges for this tenancy window appears, displaying all Rent Charges, click Edit and click Delete to remove all Rent Charges

Set up the Service Charge invoice

1. Click Tenancies on the main toolbar
2. Select the relevant leaseholder from Recent & Favourite Tenancies
   1. Alternatively, find the leaseholder using the Search Tenancies bar in the top right
3. The tenancy Overview screen displays. Click Actions
4. In the dropdown menu, click Charge
5. Click Add Charge
6. The Add Charge for this Tenancy window opens
   1. Charge Date - Set this as the next date in which the leaseholder is due to pay their Service Charge
   2. Charge To - This remains as the leaseholder at the property address 
   3. Frequency - Set this as the frequency which your leaseholders' Service Charge is agreed 
   4. Charge Item - Click Landlord Income and then tick Service Charge
   5. Description - It's advised that you don't edit or delete this as it allows Alto to generate the monthly description based on the charge date and the frequency
   6. Net Amount - Enter the amount you will be charging
7. Click OK

Management fee and supplier expenses (grounds maintenance, common area repairs)

All supplier invoices, annual insurance costs, management fees, and other expenses for the block are added as a charge on the Head property.
For more information on Raising an expense charge on a property, click here

Create your agency as a supplier and charge your management fee as an expense on the Head property. 

Produce a management income and expenditure report

In preparation of an AGM, at the end of the financial year or at any other time, you are able to obtain a balance of the income and expenditure of the block from the Management Company record. This can be printed or emailed.
For more information on Landlord period statements, click here

Reconcile the Management Company bank account

When you reconcile your Management Company bank account, you compare your Alto financial records against the records provided to you by your bank.  A reconciliation helps you identify any unusual transactions that might be caused by fraud or accounting errors, and the practice can also help you spot accounting inefficiencies.
For more information on Completing a bank reconciliation, click here