What is service charge accounts certification?

Every year, the party that manages your building — the freeholder, a residents' management company or a managing agent — should draw up service charge accounts covering the accounting year. These accounts set out the total costs incurred, how they were apportioned between leaseholders, what was demanded on account, and the closing balance of any reserve fund. Certification is the step where an independent accountant reviews those accounts and signs them off.

What certification actually involves

The precise requirement comes from your lease, not from a single rule that applies to every building. Read the service charge clause carefully:

• Certification — the most common wording. An independent accountant confirms the accounts present a fair summary of the relevant costs. This is a lighter-touch sign-off than a statutory audit.
• Audit — some leases require a fuller audit, in which the accountant gives a formal opinion under recognised auditing standards. This is more rigorous and usually more expensive.
• Preparation only — a few leases require accounts to be prepared but not independently certified at all.

Good practice follows the joint ICAEW/TPI guidance Tech 03 ("Residential service charge accounts"), the recognised industry standard for how these accounts should be prepared and presented. An accountant certifying to Tech 03 gives leaseholders a consistent, comparable picture year to year.

Certification is not the same as your Section 21 right

Certification is a lease obligation. Separately, Section 21 of the Landlord and Tenant Act 1985 gives every leaseholder a statutory right to require the landlord in writing to supply a written summary of the relevant costs for the last accounting period. Once you have that summary, Section 22 lets you inspect the underlying accounts, receipts and supporting documents. These rights exist whether or not your lease requires certification, and they are a powerful way to see the raw figures behind a demand.

How the accounts connect to your bill

The certified accounts are where a balancing charge is calculated: once the year's actual costs are known, they are compared with what you paid on account, and you are either asked for the shortfall or credited the surplus. If the certified figures show spending that looks high, unexplained or outside the lease, that is exactly the point to start asking questions — and, if needed, to challenge.