A Guide to Section 20 for Leaseholders
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”. They may also be able to charge you for improvements, if your lease states that you are liable to contribute to them.
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 works they are carrying out were 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.
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
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. Even if just one leaseholder nominates a contractor, the landlord must consider them for the tender process, as long as they meet the necessary criteria, such as carrying liability insurance.
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 works. If the contractor was not one 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 works 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?
Our teams of skilled tradespeople always have 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 for 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.
Quick Section 20 facts for leaseholders
- If your landlord doesn’t follow Section 20 procedure, the most they can charge is £250 for one off works and £100 per year for long term.
- Stage one of Section 20 involves the landlord presenting all leaseholders with their proposed works for feedback.
- Leaseholders can then nominate their own contractors for the works and landlords must consider each eligible nomination for a quote.
- In stage two, the landlord provides estimates for the works, at least one of which must be from a contractor chosen by a leaseholder.
- If all parties are happy with the estimate, the landlord chooses and contractor and the works can proceed.
- If the chosen contractor did not provide the cheapest quote or wasn’t nominated by a leaseholder, the landlord must justify their choice.