Section 20 Consultation — What It Is and What It Means for Service Charges

What Is Section 20?

Section 20 of the Landlord and Tenant Act 1985 (as amended by the Commonhold and Leasehold Reform Act 2002) requires freeholders and managing agents to consult leaseholders before carrying out ‘qualifying works’ or entering into ‘qualifying long-term agreements’ that would result in any one leaseholder being charged more than a set threshold.

The purpose is to give leaseholders a meaningful opportunity to comment on proposed works and contractors before costs are committed.

When Does Section 20 Apply?

**Qualifying works** are works to a building or any other premises that the landlord is obliged or entitled to carry out under the lease. Section 20 applies where the contribution from any one leaseholder would exceed **£250**.

**Qualifying long-term agreements** are agreements with a contractor or supplier entered into for more than 12 months (e.g., a cleaning or maintenance contract). Section 20 applies where the contribution from any one leaseholder would exceed **£100 per year**.

The Three-Stage Consultation Process

The regulations set out a mandatory three-stage process for qualifying works:

Stage 1: Notice of Intention

The landlord must serve a Notice of Intention on each leaseholder and any recognised tenants’ association. The notice must:

• Describe the works proposed (in general terms)
• State why the works are necessary
• Invite leaseholders to make written observations within 30 days
• Invite leaseholders to nominate a contractor they would like to be asked to tender

Leaseholders can nominate contractors at this stage — and if they do, the landlord must invite that contractor to submit an estimate.

Stage 2: Notice of Estimates

The landlord must obtain at least two estimates and must obtain an estimate from any contractor nominated by leaseholders (unless there is good reason not to). The landlord then serves a Notice of Estimates on each leaseholder showing all the estimates received. Leaseholders have 30 days to make observations.

If the landlord proposes to accept an estimate that is not the lowest, they must include a statement of their reasons.

Stage 3: Notice to Proceed (if required)

If the landlord does not choose the lowest estimate and leaseholders’ observations did not endorse a different contractor, the landlord must serve a further Notice to Proceed explaining their choice.

What Happens If the Landlord Fails to Consult?

If the landlord carries out qualifying works without following the Section 20 process, the amount recoverable from each leaseholder through service charges is **capped at £250** for qualifying works (or £100 per year for qualifying long-term agreements), regardless of the actual cost. The landlord cannot recover the excess unless dispensation is granted by the First-tier Tribunal.

This is a significant financial consequence for landlords who cut corners — and meaningful protection for leaseholders.

Section 20ZA Dispensation

In urgent circumstances (for example, emergency repairs after a flood), the landlord can apply to the First-tier Tribunal under Section 20ZA for dispensation from all or part of the consultation requirements. The Tribunal will grant dispensation where it is satisfied that it is reasonable to do so. Leaseholders can oppose the application.

Checking for Upcoming Major Works

When buying a leasehold property, buyers’ solicitors check the management pack for any current or upcoming Section 20 consultations. A building with a Section 20 notice already served may have significant service charge demands arriving shortly after purchase — a buyer has no protection against this, as they take on the service charge obligations under the lease.

Buyers should always ask their solicitor to check the management pack specifically for:

• Any current Section 20 consultations
• Any major works planned in the next 12–24 months
• The balance of the reserve fund (which may or may not cover the works)

Property Passport UK stores Section 20 consultation records and major works history for leasehold buildings, giving buyers and leaseholders clear visibility of past and upcoming works before committing to a purchase.