Section 20 Notice – What is this? Part 1
pp Section 20 Notice is an intention for some major works for the building. This is the most contentious part of any management. Often it leads to lessees considering the additional charges for repairs.
It often leads to lessees considering whether it is worth considering a Right to Manage. Or to buy the freehold by way of an enfranchisement.
Leaseholders must pay various charges. The freeholder must consult before carrying out works. He must also consult before entering into a long-term agreement for services.
Why must they consult you?
Under the terms of your lease, you must pay towards the cost of services or any work to your home. This is a service charge. The contents of your lease will outline this. A Section 20 is a notice under the Landlord & Tenant Act 1985 which was amended by Section 151 on the Commonhold and Leasehold Reform Act in 2002.
The regulations separate the consultant procedures into four schedules each covering different types of contracts. The regulations will outline the format of notices. There are three main headings in relation to these regulations. These are qualifying works, qualifying long term agreements, and qualifying works under long term agreements.
What must they consult you about?
They must consult before doing any work as follows: –
Carry out any work that will cost each one leaseholder more than £250.00. This includes repairs, maintenance, and improvements to your building.
Enter a long-term agreement for more than 12 months. This relates to any outside contractor. It can be for work supplies or services that will cost each leaseholder.
Carry out a long-term agreement where the work will cost any one leaseholder more than £250.00.
There was a case in the High Court in 2012 of Phillips –v- others and Francis. This cast doubt on whether there is a cost threshold that freeholders need to consult on. This relating to qualifying works. This was qualified in October 2014 by the Court of Appeal which set out an approach i.e. Individual sets of qualifying works are applied for under Section 20 Consultations. This is reference to either time periods or service charge years.
They gave a guidance on what factors should be considered when qualifying works. For example: –
- Firstly, where the items of work are.
2. Secondly, whether they are subject to the same contract
3. Thirdly, whether they are to be done at more or less the same time or at different times
4. Whether the items of the work are different in character from or have no connection with each other
5. Whether all the works are subject to one contract
6. Lastly, the way in which work is planned. Unless there are reasons for the way they are implemented are also of relevance.
What are qualifying long term agreements?
A long-term agreement is one that is entered into by the freeholder with an independent organisation. It is a minimum of 12 months. The freeholder must consult where the amount payable by any one contributing leaseholder. The agreement must be in respect of a payment exceeding £100.00. Where a property has unequal shares the freeholder must consult. He must consult all leaseholders if any one of them would have paid more than £100.00 per annum. There is a calculation for this.
If they do not consult you then the freeholder may not be able to recover more than £100.00 per leaseholder. This is in that accounting period for the cost under that agreement.
It is important that you understand what your rights are and at that point contact a solicitor.
What is a Section 20 Notice?
A section 20 Notice is to tell you that they intend to carry out work. They provide a service to the leaseholders that you must pay towards. They must serve a Section 20 on any leaseholders affected by the work and/or received a service. A copy of the Section 20 must be sent to any registered tenants association. The association within your building or home. It could be the association that the estate is on. The Section 20 includes certain information that’s required.
It will give you the opportunity to take part in the consultation process and everything that may be planned. It is important that if you disagree with the work or want to take part in the consultation you contact them.
A section 20 Consultation is only part of the process. There are other notices that need to be served on you.
You have a right to give your views. You have a right to comment on any of the works within the consultation period. This is normally 30 days. Any managing agents and/or freeholder must take notice of any comments that they require and clearly consider these.
Where they are planning to do major work, you have the right to name your own contractor. You have the right to request a firm or contractor to attend for the works. We attach a Section 20 consultation explained – https://www.lbhf.gov.uk/sites/default/files/Section_20_consultation_explained_tcm21-114705.pdf
What does a Section 20 Notice have to include?
For instance, see below: –
- a) Describe what agreement or tell you where you can get information on what work they intend to carry out.
b) Explain the reasons why they want to carry out the work
c) what work is needed
d) Invite you to make comments and proposals in writing
e) Invite you to suggest a nominated contractor
f) Give you a date on which the consultation finishes, and this can’t be less than 30 days
They will probably not give you an indication of the cost. The Section 20 is the way that they serve a schedule of works. A specification is done by a surveyor. It will normally thereafter put it out to tender.
Who should be consulted?
Individual leaseholders will receive the notice. Any residents association and/or any other people.
What is the second stage of the Consultation?
Once the Section 20 has been served they will then look to send the documentation out by way of a tender. Therefore, this will be sent to various companies to get quotes so you have an idea of what the cost will be. A second document is served on you being the statement of estimates which we will mention later.
Finally, please click here for part 2.
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