TMO Allowances
We’re often contacted regarding the allowances paid to Members and asking whether or not they’re getting their fair share. It’s clear that very few people seem to understand the way in which allowances should be calculated as there isn’t a ‘one size fits all’ in terms of the sums paid to TMOs. This is because whilst the methodology stays the same the local costs will vary from one landlord to another.
The allowances paid to your TMO should reflect the parent landlords own spend on providing the same service on directly managed estates. Issues can arise where the comparator area in your management agreement no longer exists for whatever reason but this shouldn’t deter you.
Allowances should be reviewed in full every five years(ish) and should follow the same method as when the TMO was established i.e. a 5 year period should be considered, uprated for inflation and averaged out having discarded the highest and lowest.
A number of years ago we produced a guide to allowances to sit alongside the statutory guidance and it’s worth considering this if you are having discussions about your allowances.
Always remember though that allowances are based on the actual costs incurred NOT budgets!
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