Section 20 Major Works: Common Mistakes to Avoid

Q: What is Section 20 consultation?

Section 20 of the Landlord and Tenant Act 1985 requires landlords and managing agents to consult leaseholders before carrying out qualifying works where any leaseholder's contribution will exceed 250 pounds, or before entering into a qualifying long-term agreement where any leaseholder's contribution exceeds 100 pounds per year. The consultation follows a prescribed three-stage process and failure to comply limits the amount that can be recovered from leaseholders.

Q: What happens if Section 20 is not followed correctly?

If the Section 20 consultation procedure is not followed correctly, the landlord's ability to recover costs from leaseholders is capped at 250 pounds per leaseholder for the qualifying works, regardless of the actual cost. This can leave the freeholder or management company with a significant funding shortfall. Leaseholders can also challenge the reasonableness of service charges at the First-tier Tribunal if they believe the consultation was defective.

Q: Can I get a dispensation from Section 20?

Yes. The landlord can apply to the First-tier Tribunal for dispensation from all or part of the consultation requirements. Dispensation may be granted where the tribunal is satisfied that it is reasonable to do so, for example where works are urgently needed and delay would cause further damage. However, dispensation is not guaranteed and the tribunal may impose conditions. It is always better to follow the consultation procedure correctly from the outset.

Q: How long does the Section 20 process take?

The minimum statutory consultation period is around three months, comprising a 30-day initial notice period, the tendering process, and a further 30-day notice period for leaseholders to comment on the tenders. In practice, the process often takes four to six months when allowing time for specification preparation, tendering, tender evaluation and responding to leaseholder observations. Managing agents should build the consultation timeline into the overall project programme from the outset.

Overview

Getting Section 20 right

Section 20 consultation is a legal requirement before carrying out major works on residential blocks where leaseholder contributions exceed 250 pounds. Getting it wrong can limit cost recovery, delay projects and expose managing agents to tribunal challenges.

Mistake 1: Starting works before consultation

The most serious mistake is beginning works before completing the consultation process. Unless emergency works are genuinely needed and a dispensation application is made, works must not start until the three-stage consultation is complete. Starting early exposes the freeholder to a 250-pound-per-leaseholder cap on recoverable costs.

Mistake 2: Inadequate specification

A vague or incomplete specification leads to unreliable tenders, scope disputes during the works and challenges from leaseholders. The specification should be prepared by a qualified building surveyor and be detailed enough for contractors to price accurately and for leaseholders to understand what they are being asked to contribute towards. Procurement and tendering advice is valuable here.

Mistake 3: Poor record keeping

Every stage of the consultation must be properly documented. This includes proof of service of notices, copies of all leaseholder observations and the landlord's written response to those observations. If the process is challenged at tribunal, the quality of the documentation is often decisive.

Mistake 4: Failing to consider leaseholder nominations

Leaseholders have the right to nominate contractors at the tendering stage. Failing to properly consider nominations, or dismissing them without good reason, is a common ground for challenge. All nominated contractors should be invited to tender on the same specification and their bids evaluated on the same criteria.

FAQ

Frequently asked questions

What is Section 20 consultation?

A statutory three-stage consultation process required before qualifying works exceed 250 pounds per leaseholder. Failure to comply caps recoverable costs at that amount.

What happens if Section 20 is not followed correctly?

The landlord's cost recovery is capped at 250 pounds per leaseholder regardless of actual cost, and leaseholders can challenge charges at the First-tier Tribunal.

Can I get a dispensation from Section 20?

Yes, by applying to the First-tier Tribunal. Dispensation may be granted for urgent works, but is not guaranteed. Following the procedure correctly from the start is always preferable.

How long does the Section 20 process take?

The minimum statutory period is around three months. In practice, allow four to six months when including specification preparation, tendering and evaluation.

Next Steps