What is Section 20 consultation?

It applies if your landlord wants to do work or arrange a contract that will cost leaseholders more than a certain amount through your service charge.

It’s intended to protect you from paying more than you need. It makes sure you’re informed about planned work or services, the reasons for it, the costs and how contracts are awarded, and that you have an opportunity to comment.

Your landlord must consult through the Section 20 process if they want to:

• do qualifying works – major works, such as repairs, maintenance and improvements, that will cost any one leaseholder more than £250 (including VAT), for example replacing or repairing the roof, or replacing a lift
• arrange a qualifying long-term agreement – an agreement for work or services that will last more than 12 months and cost any one leaseholder more than £100 a year (including VAT), for example a contract for waste management, maintenance, cleaning or gardening, or a contract for building work that is expected to last more than 12 months
• do qualifying works under a long-term agreement – work that will cost any one leaseholder more than £250 (including VAT), and is covered by an existing agreement with a contractor, such as a contract for building work

If the service charge is not split equally between all the flats then your landlord must consult if the work or services will cost more than these thresholds for the flat that pays the largest share.

If the landlord does not consult correctly, they may not be able to recover more than £250 (for major works) or £100 (for long-term agreements) from each leaseholder. However your landlord can apply to a tribunal for permission not to consult, called dispensation.

Some types of contracts do not count as qualifying long-term agreements. These include:

• contracts that last for 12 months and need to be formally renewed each year, such as buildings insurance and contracts with a managing agent
• employment contracts, such as employing a caretaker
• an agreement between a holding company and its subsidiary, or between subsidiaries of the same holding company – for example if the landlord and a maintenance company are both owned by the same organisation

The landlord must consult each leaseholder, and any recognised tenants’ association if there is one, by issuing Section 20 notices.

They must consult before they enter into a contract, unless they have been given permission not to consult. For example they might apply for permission not to consult if the work is urgent.

The process takes several months. There are usually 3 stages:

• notice of intention, before the landlord invites tenders for the work or agreement
• statement of estimates or notice of proposals, once they have estimates of the costs for the work or proposals for the agreement
• notice of reasons for awarding the contract, when they’ve decided who will do the work or services

For work under a long-term agreement, there is only one stage because the contractor who will do the work has already been chosen.

Each notice must give you and any other leaseholders a chance to understand the proposed work or services and share your views. In some circumstances you can also nominate a contractor who may be asked to give an estimate.

Each notice will tell you the deadline for responding. The legislation for the period in which you can respond refers to the “date of the notice” rather than the date it was issued or received. The tribunal has ruled that if a notice is posted, the “date of the notice” should usually be treated as 2 working days after it was posted.

Some of your consultation rights might be different if your landlord is a public sector organisation such as a local authority or housing association.

Public sector landlords must show they are being fair and transparent when they hire contractors. They must follow rules for advertising contracts publicly using the government’s Find a Tender service if they’re over a certain value – this is called giving a public notice.

If your landlord needs to give a public notice, you will not be able to nominate a contractor. You’ll still be able to make comments about the work or services.

The rules about the consultation process are set out in Section 20 of the Landlord and Tenant Act 1985, as amended by the Commonhold and Leasehold Reform Act 2002.

The details are in regulations:

• the Service Charges (Consultation Requirements) (England) Regulations 2003
• the Service Charges (Consultation Requirements) (Wales) Regulations 2004