BIM24782 - Mutual associations: specific activities: property management companies

The basics

In many blocks of flats, services such as security, gardening, external decoration and the cleaning and decoration of common parts of the building are provided by a management company. Each occupant pays a regular charge to the management company.

If the property management company is carrying on a property business there can be no question of mutual trading. This is because mutual trading is exclusively a trading concept. There is specific statutory confirmation of the non-application of the mutuality principle to a property business at ICTA88/S21C.

The treatment to be adopted in respect of service charges received by occupier-controlled flat management companies as from 1 April 1998 is described at PIM1070.