Section 20 Consultation for Property Managers: A Practical Guide
Before major works or long-term service contracts in residential blocks, property managers must follow the Section 20 consultation process. Getting it wrong leaves you unable to recover costs.
What Is Section 20
Section 20 of the Landlord and Tenant Act 1985 (as amended by the Commonhold and Leasehold Reform Act 2002) requires landlords or managing agents to consult leaseholders before:
- Carrying out qualifying works where any one leaseholder would be charged more than £250
- Entering into a qualifying long-term agreement (a service contract for more than 12 months) where any one leaseholder would be charged more than £100 per year
If the consultation process is not properly followed, the landlord can only recover £250 per leaseholder for the works (or £100 per year for contracts) regardless of actual costs — potentially a very significant loss on major roof or lift projects.
The Three-Stage Process for Qualifying Works
Stage 1: Notice of Intention
Write to all leaseholders and any recognised tenants' association describing the works proposed, why they are needed, and inviting observations within 30 days. The notice must name a place in the UK where the specifications and estimates can be inspected. Observations received must be considered (not just acknowledged).
Stage 2: Notice of Estimates
Obtain at least two estimates (one from a person wholly unconnected to the landlord). Write to leaseholders again enclosing a summary of the estimates. Allow 30 days for observations. Where a nominated contractor from leaseholders' suggestions is not used, explain why.
Stage 3: Notice of Award
Where the chosen contractor is not the lowest estimate, or is connected to the landlord, write to leaseholders explaining the decision within 21 days of entering the contract.
Emergency Works
Dispensation from consultation is available from the First-tier Tribunal (Property Chamber) where works are urgent. If works are genuinely an emergency (e.g. a burst pipe causing structural damage), act first and apply for dispensation afterwards — the tribunal will consider whether genuine urgency existed.
Frequently asked questions
What happens if I carry out works without Section 20 consultation?
You can only recover £250 per leaseholder for the works, even if the actual cost per leaseholder was much higher. On a major roof replacement costing £60,000 across 20 flats, you would only recover £5,000 instead of £60,000.
Do I need to get three quotes for Section 20 works?
You need at least two estimates, including one from a contractor who has no connection to the landlord. There is no requirement for three quotes, though obtaining more gives better comparison and reduces the risk of challenge.
Can leaseholders nominate their own contractor?
Yes — if a recognised tenants' association nominates a contractor in response to the Notice of Intention, you must obtain an estimate from that contractor. You do not have to use them but if you do not, you must explain why in the Notice of Estimates.
What counts as a "qualifying long-term agreement"?
Any service contract for more than 12 months where leaseholders will be charged. This includes contracts for cleaning, gardening, building maintenance, insurance management and lift servicing where the annual cost per leaseholder exceeds £100.