Buying a Flat With Section 20 Notice
(Last Updated: 07/12/2023)
06/02/2023
150
4 min read
Key Takeaways
- Section 20 is the legal requirement for freeholders to consult with leaseholders regarding certain required works
- The freeholder will serve a section 20 notice on the leaseholders for any proposed major works
- As buyer, you will become liable for the cost
- If you are buying a flat with a section 20 notice served on it, you should reduce your offer
What is a Section 20 when buying a property?
Section 20 of The Landlord & Tenant Act 1985 requires freeholders to consult with their leaseholders regarding major works that will cost any single leaseholder more than £250, under lease terms which make the leaseholders responsible for contributing toward maintenance, repair or improvement costs relating to the whole freehold.
When you're buying a property you may find that the lease is undergoing the section 20 consultation or that works are soon to begin. The seller should tell you this as early as possible, but if they don't, it should be discovered by your conveyancing solicitor during legal enquiries. By purchasing the property, you will be taking on the liability for the lease's share of the costs for the work.
Should I reduce my offer when buying a flat with a section 20 notice?
It is standard practice to reduce the purchase price by up to the full cost for which you will become liable. Alternatively, you may request the seller to place the amount in a retainer held by their solicitor, to pay the costs.
What if there's no Statement of Estimated Costs yet?
Problems arise when a Notice of Intention is served, but the freeholder has not yet delivered a Statement of Estimated Costs - this must be delivered at least 21 days before the work is due to begin, but there is technically no time limit on how long a notice of intention can stand before the estimated costs are provided.
If the freeholder has given an ETA for the estimated costs, it may be best to wait, otherwise, consider the works specified in the notice of intention. For example, if the work is a complete replacement of the roof structure and there are only 4 flats in the building, then you are looking at a very heavy bill. It would be wise not to purchase at all; any price reduction you can negotiate with the seller is a gamble on both sides.
Should I buy a flat with a section 20 notice?
These works are common place and shouldn't put you off. However, you shouldn't buy at full price if you are taking on a large cost liability. Your conveyancing solicitor will be able to help you negotiate your purchase price down to a reasonable cost. Remember that your seller is in a position where they will be liable to pay the cost anyway if they don't sell, and any other prospective buyer will most likely make the same request.
Frequently Asked Questions
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Written by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
Reviewed by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
