A Section 20 Notice is an intention to tell you that your landlord/freeholder plan to do some major works to the building. It is the most contentious part of any management. Often it leads to lessees considering why they are being charged so much money for repairs.
It often leads to lessees considering whether it is worth considering a Right to Manage. Or to buy the freehold by way of an enfranchisement.
Leaseholders have to pay various charges. But must be consulted by a landlord carrying out qualifying works or entering into a long term agreement for provision of services.
Why must they consult you?
Under the terms of your lease, you must pay towards the cost of services or any work to your home that is in or on the estate that you are on. You do this by paying what is known as a service charge which is detailed within the contents of your lease. A Section 20 is a notice under the Landlord & Tenant Act 1985 which was amended by Section 151 on the Commonhold and Leasehold Reform Act in 2002.
The regulations separate the consultant procedures into four schedules each covering different types of contracts. The format of notices is often required by regulations and have not been prescribed in the legislation. There are three main headings in relation to these regulations in respect of qualifying works, qualifying long term agreements and qualifying works under long term agreements.
What must they consult you about?
They must consult before doing any work as follows:-
- Carry out any work that will cost each one leaseholder more than £250.00 including repairs, maintenance and improvements to your building.
- Enter a long term agreement for more than 12 months with outside contractors for work supplies or services that will cost each leaseholder.
- Carry out a long term agreement where the work will cost any one leaseholder more than £250.00.
There was a case in the High Court in 2012 of Phillips –v- others and Francis that cast doubt on whether there is a cost threshold which landlords do not need to consult on qualifying works. This was qualified in October 2014 by the Court of Appeal which set out an approach i.e. Section 20 Consultations should be applied to individual sets of qualifying works without reference to either time periods or service charge years.
They gave a guidance on what factors should be taken into account when qualifying works. These were:-
- Where the items of work are to be carried out.
- Whether they are subject to the same contract
- Whether they are to be done at more or less the same time or at different times
- If the items of the work are different in character from or have no connection with each other
- Whether all the works are subject to one contract
- The way in which work is planned. Unless there are reasons for the way they are implemented are also of relevance.
What are qualifying long term agreements?
A long term agreement is one that is entered into by the landlord with an independent organization or contractor for more than 12 months. The landlord must consult where the amount payable by any one contributing leaseholder under the agreement in any accounting period exceeds £100.00. A property with unequal service share the landlord must consult all leaseholders if any one of them would have paid more than £100.00 in any one year. There is a calculation for this.
If they do not consult you then the landlord may not be able to recover more than £100.00 per leaseholder in that accounting period for the cost under that agreement.
It is important that you understand what your rights are and at that point contact a solicitor.
What is a Section 20 Notice?
A section 20 Notice is to tell you that they intend to carry out work or provide a service to the leaseholders that you have to pay towards. They must serve a Section 20 on any leaseholders affected by the work and/or received a service. They must send a copy of the Section 20 to any registered tenants association that may be associated with your building or home or the estate that it is on. The Section 20 includes certain information thats required.
It will give you the opportunity to take part in the consultation process and everything that may be planned. It is important that if you disagree with the work or want to take part in the consultation that you contact whoever is serving this on you.
A section 20 Consultation is only part of the process. There are other notices that need to be served on you.
You have a right to give your views and comment on any of the works within the consultation period which is normally 30 days. Any managing agents and/or freeholder must take notice of any comments that they require and clearly consider these.
Where they are planning to do major work you have in certain circumstances the right to suggest a person, firm or contractor that you may wish to tender for the work.
What does a Section 20 Notice have to include?
It has to do the following:-
- Describe what agreement or tell you where you can get information on what work they intend to carry out.
- Explain the reasons why they want to carry out the work
- Say what work is required
- Invite you to make comments and proposals in writing
- Invite you to suggest a nominated contractor
- Give you a date on which the consultation finishes and this can’t be less than 30 days
It is unlikely at this time that they will give you an indication of what the cost of the work will be. The Section 20 is the way that they serve a schedule of works via a specification from a surveyor and will normally thereafter put it out to tender.
Who must be consulted?
Notice must be sent to either individual leaseholders, any residents association and/or any other people.
The Act doesn’t necessarily need a contractor to be nominated by leaseholders but they can do so.
What is the second stage of the Consultation?
Once the Section 20 has been served they will then look to send the documentation out by way of a tender to various different companies in order to get quotes so that you have an idea of what the costs will be. A second document is served on you being the statement of estimates which we will mention later.