UNDERSTANDING SECTION 20
Section 20 of the Landlord and Tenant Act 1985 is a cornerstone of leaseholder protection in England and Wales. This crucial piece of legislation mandates a thorough consultation process between landlords and leaseholders before any qualifying works or long-term agreements are undertaken that would result in service charges exceeding £250 per leaseholder. The essence of Section 20 is to ensure transparency and involvement, allowing leaseholders to be fully informed and to voice their observations or objections regarding the proposed works or agreements. This consultation process is designed to prevent any unexpected financial burdens on leaseholders and to ensure that the decisions made are in the best interest of all parties involved.
WHAT DOES SECTION 20 MEAN FOR LEASEHOLDERS?
Section 20 considers freeholders, Resident’s Management Companies, Right to Manage Companies or any other property managers with freehold responsibilities as landlords – remember this wherever we refer to “landlords” below.
If you are a leaseholder, certain parts of the building you live in will be your responsibility to look after, while others will be your landlord’s.
Your lease will describe which are which. Usually, you will be responsible for the interior of your property while your landlord will be responsible for the wider structure and any communal areas or shared building services.
Landlords can recover some or all of the costs of these works from the leaseholders through a service charge. In 2003, Section 20 was added to the Landlord and Tenant Act to protect leaseholders from being overcharged by their landlords.
Repairs and maintenance performed by the landlord for which they can charge leaseholders are known as “qualifying works”.
If the charge for any qualifying works exceeds £250 for any one leaseholder, your landlord is legally obligated to carry out the Section 20 procedures; otherwise, the maximum they can charge you is £250.
Section 20 also covers any qualifying long-term agreements for ongoing contracts such as maintenance for lifts and entry systems, roof repair, painting, cleaning, gardening and so on if the yearly costs exceed £100 for any one leaseholder.
Your landlord must follow the Section 20 procedures even if the work they are carrying out was requested by the leaseholders or a Recognised Tenants Association.
HOW DOES SECTION 20 PROTECT LEASEHOLDERS?
Section 20 procedures provide transparency to the tender process so that leaseholders can be sure that they are being fairly charged for any qualifying works and that the chosen contractors are likely to complete the works to a high standard.
There is a strict, three-stage procedure which your landlords must follow. Failure to comply with any stage of the procedure will make them unable to charge more than £250 for one-off works or £100 a year for long term agreements.
The Section 20 consultation process ensures that all leaseholders are treated fairly, avoiding unequal service charge contributions by requiring landlords to disclose estimated costs and justify how they were calculated. During the consultation period, private landlords must adhere to precise procedures, including providing leaseholders with detailed information about the costs incurred or expected for such an agreement.
Where Section 20 cases have been taken to the First Tier Tribunal, they have interpreted the legislation to the letter – there is no negotiation, and landlords cannot claim they were unfamiliar with the legislation as an excuse.
Stage One: The Notice Of Intention And Pre-Tender
Under the Section 20 consultation process, the landlord carries the responsibility to consult leaseholders before carrying out major works or entering into long-term agreements for services. They may also be able to charge you for improvements, if your lease states that you are liable to contribute to them.
Landlords must serve all leaseholders a Notice of Intention to Carry Out Works which describes, in writing, the maintenance, repairs or improvements which are being proposed, why they are necessary and why the leaseholders are liable to pay a service charge.
Leaseholders then have 30 days to provide their feedback and nominate contractors to perform the works. The landlord is responsible to obtain estimates from these nominated contractors, ensuring they meet necessary criteria such as carrying liability insurance. Even if just one leaseholder nominates a contractor, the landlord must consider them for the tender process.
Stage Two: The Statement Of Estimates And Tender
If everyone is happy with the proposed works, the landlords must then gather at least two estimates for the costs from contractors or quantity surveyors, at least one of which must be provided by a contractor or surveyor chosen by the leaseholders or Recognised Tenants Association.
The landlord then presents the Leaseholders with a Statement of Estimates, which includes at least two quotes for the works, one of which must be from a leaseholder-nominated contractor or surveyor. Again, the leaseholders have 30 days to comment.
Leaseholders also have the right to view any of the other estimates gathered by the landlord which were not included in the Statement of Estimates.
Stage Three: The Notice Of Reasons And Award Of Contract
The landlord will then appoint a contractor to carry out the work. If the contractor was not chosen by the leaseholders or will not be working to the lowest estimate from stage two, they must provide leaseholders with a Notice of Reasons explaining their decision within 21 days of entering into the contract.
If leaseholders are happy with the chosen contractor, the contract will be awarded, and the work can proceed.
SHOULD I NOMINATE MY OWN CONTRACTOR DURING SECTION 20 PROCEDURES?
There are many reasons you might want to nominate your own contractor for the Section 20 procedures. They may be a contractor you have worked with before or one who has been recommended to you by a trusted source.
If you approach contractors directly, you may also be able to negotiate works on your own property in exchange for being awarded the contract for the qualifying works.
It’s always worth nominating your own contractor so that you have some control over the process. Remember that your landlord must consider all nominated contractors, even if you are the only one to suggest them, though your odds of having them chosen are much higher if you can get other leaseholders or the Recognised Tenants Association on board.
WHY NOMINATE ENVIRON PROPERTY SERVICES FOR SECTION 20 WORKS?
At Environ, we have extensive experience in providing both large scale qualifying works and ongoing maintenance contracts. We’re a family-run company who have built our reputation through high quality work at a fair price.
Our teams of skilled tradespeople always have an excellent rapport with the leaseholders of any properties we work on, and we do our best to make sure everyone who lives in the building is as informed and undisturbed during the works as possible.
We have a genuine passion for taking care of London’s buildings, especially its irreplaceable Georgian, Edwardian and Victorian architecture. Director Terry Clark is a member of the Society for the Protection of Ancient Buildings, and we’re proud of our portfolio of Conservation Area and listed building restorations.
Best of all, we provide an all-in-one, top-to-bottom service, from roofing and plumbing to carpentry and electrics – all with reliable project management and transparent contracts.
If you want to nominate us for Section 20 works, call our friendly customer service team now or request your call back.All the above information is shared from our perspective as contractors and is not legal advice. For further information, please read the Section 20 legislation here or contact a solicitor familiar with property law.
