
Understanding Section 20 for Leaseholders
Section 20 of the Landlord and Tenant Act 1985 outlines the procedures landlords must follow when undertaking major works or entering into long-term agreements where leaseholders are required to contribute through service charges. These regulations ensure transparency and fairness, protecting leaseholders from unexpected or excessive costs.
What is Section 20?
Section 20 of the Landlord and Tenant Act 1985 outlines the procedures landlords must follow when undertaking major works or entering into long-term agreements where leaseholders are required to contribute through service charges. These regulations ensure transparency and fairness, protecting leaseholders from unexpected or excessive costs.
When and Why is Section 20 Served?
A Section 20 notice must be served when proposed works exceed £250 per leaseholder or when long-term agreements (lasting more than 12 months) exceed £100 per leaseholder per year. The notice allows leaseholders to be informed of significant expenses and provides an opportunity to review, comment, or challenge the works proposed.
How is Section 20 Served?
The process is served in three stages:
Notice of Intention: The first stage informs leaseholders of the planned works and allows them to nominate contractors for the project within a 30-day consultation period.
Notice of Estimates: After obtaining at least two estimates, leaseholders are presented with these figures and can make observations within another 30-day period.
Notice of Award of Contract: The final notice informs leaseholders of the chosen contractor and the reasons behind the decision.
Why Leaseholders Need to Evaluate Section 20 Notices?
As a leaseholder, understanding Section 20 is essential because it directly impacts your financial obligations. Reviewing the notices allows you to:
Scrutinize Costs: Ensure the proposed works are reasonable and necessary.
Nominate Contractors: Propose alternative contractors to help keep costs competitive.
Challenge Decisions: If costs appear inflated or works unnecessary, you have the right to raise objections.
Review Documentation: Check if the works come with warranties or guarantees, which can affect future repair costs. For example, if the roof was replaced within the last five years, you can reasonably expect it won't need major repairs for another 10-20 years.
Key Considerations When Buying a Leasehold Property?
When purchasing a leasehold property, reviewing previous Section 20 notices helps you anticipate potential future costs. For example, if major works like fire alarm system upgrades or roof repairs were recently completed, future service charges may be lower. Conversely, if significant works are pending, you could face higher costs soon after purchasing.
It is important to note that Section 20 applies regardless of whether you are a leaseholder or hold a share of freehold. Even in share-of-freehold properties, there is always an underlying lease, and all tenants must be formally notified of major works and given the opportunity to respond.
Additionally, the size and complexity of the property grounds will affect service charges. Larger communal areas or buildings with complex systems (e.g., lifts or fire alarm panels) typically incur higher maintenance costs.
At Tollington Surveyors, we include these critical assessments in our Homebuyer Surveys and Building Surveys. We help you understand past works, potential future costs, and the presence of warranties, ensuring you make an informed decision and avoid unexpected financial burdens.
Tollington Surveyors is a small, locally-focused surveying company based in Stroud Green, and dedicated to serving the Haringey area. Learn more >