Section 20 Consultation
09/02/2023
(Last Updated: 13/02/2023)
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Key Takeaways
- If your lease states that you are liable to pay for maintenance or repairs for the entire freehold, and these works will cost more than £250 per leaseholder, a section 20 consultation must take place.
- The section 20 consultation process involves being served a notice of intention, an estimation of costs and if applicable, another notice stating the reasons for the award of contract.
- You can refuse to pay for this, if your lease doesn't state that you are liable to contribute towards service charges, or you can take this matter to court.
- Sinking funds can be used to cover these costs and the leaseholders don't have to receive the section 20 consultation unless the costs exceed the amount in that account.
Under the Section 20 of the Landlord and Tenant Act 1985, if you own a leasehold property and the landlord (i.e. the freehold owner) decides to carry out major works, they need to consult you if the costs will surpass £250. Major works include repairs or replacing of external brickwork, lifts or communal areas. We discuss this in further detail in our article - Section 20 Major Works.
Have you been asked to pay for the remediation of a safety defect?
- Leaseholders protections ensures that you are not liable to pay.
- If you qualify, you will be protected from the financial burden of remediation costs concerning building safety.
- If you're trying to sell, you will need a Deed of Certificate to prove that the leasehold is subject to leaseholder protections.
- Is the freeholder still forcing you to pay for these costs? We can help solve this property challenge.
What is Section 20 leasehold consultation process?
The section 20 consultation process is usually broken down into separate phases, each involving its own steps and procedures. The consultation has to take place before any major works are started.
- 1
Notice of intention, which sets out:
- What work the freeholder intends to carry out
- Why the freeholder needs to carry out this work
- A list of approved contractors which the freeholder is going to tender the work to
As the leaseholder, you can write down any suggestions or questions about the proposed works on the comments form included with the notice, and - most importantly - can use it to nominate a contractor that you would like to be included in the tendering process.
If the freeholder carries out the major works under a Qualifying Long Term Agreement (QLTA), they only have to serve you with a Notice of Intention: they don't send you a Notice of Proposal. A Qualifying Long Term Agreement (QLTA) is an agreement between a freeholder and a contractor to provide goods and services which runs more than 12 months and which results in leaseholders incurring an individual charge of at least £100 per year.
With a QLTA, the contractor involved is contracted to provide a particular type of works at a pre-agreed price for the length of the contract, which might be, for example, for fitting a door entry system over a period of 3 years. The idea of a QLTA is ostensibly to guarantee work and to save on costs.
Freeholders have to consult with you about setting up a QLTA in a similar way to the above, starting with a Notice of Intention. In effect, with a QLTA already in place, you can't submit alternative contractors for consideration by the freeholder to carry out the major works in question.
- 2
Notification of estimates, which sets out:
Once the freeholder has examined your feedback, usually within 30 days, they tender the works. They send you a Notice of Proposal which lists the tenders they received as well as details of the two lowest tenders. It also lists the details of the works included in the tender price and the details of what your estimated charge will be. This is referred to as the ‘form of tender’.
If the freeholder chooses the lowest tender, they take up the contract immediately but if they don't, they have to write to you explaining why they didn't within 21 days.
Once the contractors are on the site, you can normally expect to receive an invoice within 12 weeks. Your lease states the methods you can use to pay. Once the contractors have completed the work, the freeholder calculates the actual cost of the works and issues you with an actual invoice - similar to how the service charge works.
What about the sinking fund?
Sinking funds are a reserve of cash, paid for by the leaseholders, which is used to cover for irregular and expensive works. If the cost of major works is less than the sinking fund, a section 20 consultation becomes irrelevant. The funds will be used to cover the costs and the leaseholders will be notified of how much is left afterwards.
- 3
Notification of award of contract, where applicable.
If the freeholders choose a contractor that was not nominated by the leaseholders or one that has not given the cheapest quote, they will need to serve this notification, clearly stating their reasons for choosing so.
How long does a section 20 consultation take?
The section 20 consultation usually takes around 2 months. There is no set timeline after a notice of intention is served by the freeholders, but the notification of estimated costs has to be served 21 days before the works begin.
However, should the estimated costs increase or if the leaseholders object to the major works, a section 20 consultation might have to take place again. If the leaseholders object to these works or costs, they can do so in writing, within 30 days of receiving the notice of intention. The same timeframe applies to the estimation of costs.
Section 20 refusal to pay
You are only liable to pay for what is stated under the terms of your lease. If you cannot reach an agreement with your landlord, you can take this matter to court.
Alternatively, if the landlord fails to carry out the section 20 consultation, you can refuse to pay any more than £250 for the costs.
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Written by:
Laura Cristian
Laura has a talent for data analysis and fact-finding. She is an advertising graduate with a broad range of skills in the web marketing field within conveyancing sector. She works closely with our panel of solicitors and surveyors to understand our clients' needs and challenges and to write the most valuable content for you.
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.
