Running a right to manage company
Section 20 consultation for major works
Planning for major works
It’s best to collect money for a reserve or sinking fund, if the lease allows this.
A fund will allow you to spread major works expenditure over time, and will make it easier to collect the money you’ll need, without sudden increases in the service charge.
Before deciding how much to collect you’ll need to do a survey of the building and check the terms of the lease. The lease may set out timings for when regular work such as repainting should be done.
If it’s not stated in the lease, you’ll need to get advice from a surveyor about when works are needed.
A surveyor can prepare a major works or capital expenditure budget to make planning easier. This will usually be over 10 to 25 years.
The consultation process
Section 20 consultation is a procedure intended to protect leaseholders from paying excessive costs for major works. It gives the leaseholders notice of the landlord’s or right to manage company’s plans, and seeks their views.
The works or contract for services cannot start until the consultation process is complete, but you can issue service charge demands before, during or after the consultation, if the lease allows this.
The right to manage company will be responsible for following the correct consultation process.
The legislation is Section 20 of the Landlord and Tenant Act 1985, as amended by the Commonhold and Leasehold Reform Act 2002.
You must consult leaseholders before you either:
- carry out “qualifying works” costing any one leaseholder more than £250 (including VAT) – this covers repairs, maintenance and improvement such as roof repairs, redecoration or new flooring
- enter into a “qualifying long-term agreement” (QLTA) for the provision of services costing any one leaseholder more than £100 and lasting more than 12 months – this covers contracts for services such as boiler maintenance, cleaning and gardening
You can arrange contracts to last 12 months or less (including any notice periods) to avoid triggering the QLTA threshold. For example most management agreements with managing agents will be for 12 months.
The £250 or £100 thresholds are for the highest contributor, so in a block of mixed sized flats, this might be the largest flat if they pay the highest service charge percentage.
The thresholds apply to an individual flat, so it does not matter if someone owns more than 1 flat in the building.
These thresholds have not been revisited for over 20 years. It’s possible that the government will change the thresholds in future.
Examples: when is Section 20 consultation needed? - Show Contents Hide Contents
| Example | Consultation requirements |
|---|---|
| Painting the outside of a block of 10 flats, at a cost of £6,000 including VAT. Each leaseholder pays an equal 10% share. | Section 20 consultation is needed, as the cost is £600 per flat, which is over the £250 threshold for qualifying works. |
| Hiring a surveyor for 6 months to scope out and project manage the block’s major works. The surveyor’s costs will be over £100 per leaseholder. | Section 20 consultation is not needed, as the contract is less than 12 months. |
| Hiring a new gardening company at a cost of £1,000 per year on a 3 year contract, costing each leaseholder £120 per year. | Section 20 consultation is needed, as this is a QLTA costing over £100 and lasting over 12 months. |
| Annual renewal of the buildings insurance, costing £2,000. Each leaseholder pays a £200 share. | Section 20 consultation is not needed, as this is a 12 month contract. |
Stage 1: notice of intention
The first step is to serve a notice of intention on leaseholders, describing the works or services and why they are needed.
Leaseholders then have 30 days to make observations and to nominate a contractor.
You must try to get an estimate from a nominated contractor.
Stage 2: notice of estimates
At this stage you must provide at least 2 estimates for the works. One or more of the estimates must be independent of the right to manage company.
You must also summarise any observations from leaseholders made at stage 1 and respond to them. You do not have to follow any observations, but you must “have regard” to them.
Leaseholders have 30 days to make observations on the estimates. If you have not provided the full estimates, they can inspect them at a suitable location, such as a managing agent’s offices.
Stage 3: notice of award
If you do not choose the cheapest contractor or nominee, you must serve a notice of award giving your reasons for choosing the contractor.
You must include a summary of observations on the estimates and your response to them.
- Last updated:
- 16 December 2025
- Next review:
- 16 December 2027
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