Section 20 of the Landlord and Tenant Act 1985 is one of the most important pieces of legislation in residential leasehold property management, and one of the most frequently misunderstood. For RMC directors and freeholders, understanding it is not optional. For leaseholders, it is your primary protection against large, uncontested service charge bills.
What is Section 20?
Section 20 requires landlords and their managing agents to consult with leaseholders before carrying out qualifying works above a certain financial threshold. The purpose is straightforward: leaseholders must be given the opportunity to comment on proposed works and, importantly, to nominate contractors to be considered for the job.
The threshold is currently set at £250 per leaseholder for a single set of qualifying works. If any one leaseholder in the building would be charged more than £250 for the works, the full Section 20 process must be followed, regardless of the total contract value.
Example: A roof repair costing £8,000 shared equally between ten flats means each leaseholder would contribute £800. Because this exceeds £250 per leaseholder, the full Section 20 consultation process is required before works can proceed.
The two-stage consultation process
Section 20 consultation for qualifying works takes place in two formal stages, each with a mandatory observation period.
Stage 1
Notice of Intention
The landlord or agent issues a Notice of Intention to all leaseholders and any recognised tenants' association. This notice must describe the proposed works in general terms and invite leaseholders to make observations within 30 days. Leaseholders may also nominate a contractor to be considered. Any nominated contractor must be sought for a quote unless there are good reasons not to.
Stage 2
Notice of Proposal
After obtaining at least two estimates (and a quote from any leaseholder-nominated contractor), the agent issues a Notice of Proposal. This notice lists all estimates obtained and sets out the landlord's preferred contractor. Leaseholders have a further 30 days to make observations. If the landlord does not intend to accept the lowest estimate or the leaseholder-nominated contractor, written reasons must be provided.
Only after both stages have been completed, and the observation periods have elapsed, can works proceed and the costs be recovered through the service charge.
What happens if the process is not followed?
This is where things become serious. If the Section 20 process is not followed correctly, whether through ignorance, shortcuts, or poor record-keeping, the consequences are significant.
A landlord who has not complied with Section 20 is limited to recovering no more than £250 per leaseholder through the service charge for the works in question, regardless of the actual cost. On a large works contract, this can mean thousands of pounds of unrecoverable expenditure, which falls on the freeholder or RMC rather than being spread across the service charge.
There is a dispensation route: the First-tier Tribunal (Property Chamber) can grant a dispensation from the consultation requirements, but this is not guaranteed and requires a formal application. The Tribunal will only grant dispensation where it is satisfied that leaseholders have not been prejudiced by the lack of consultation.
Important: Dispensation is not a routine fallback. Tribunals have refused dispensation in cases where agents simply failed to follow procedure through oversight. The safest approach is always to run the process correctly from the outset.
Common mistakes managing agents make
- Missing the 30-day observation period. Both stages require a full 30-day window. Works cannot begin until this period has elapsed.
- Failing to consider leaseholder-nominated contractors. A nomination must be sought for a quote unless there are documented reasons why this is not appropriate.
- Poor record-keeping. Agents must be able to demonstrate that notices were served, received, and responded to. Without clear records, proving compliance is very difficult.
- Treating connected contracts incorrectly. A separate but related process applies to qualifying long-term agreements: service contracts lasting more than 12 months where any leaseholder contributes more than £100 per year.
- Proceeding before the process is complete. Starting works before the second 30-day period has elapsed is a failure to comply, even if the notices themselves were correct.
What about emergency works?
Where works are urgently needed to prevent immediate risk to health, safety, or significant damage to the property, a landlord may proceed without full consultation. However, this exception is narrow. The works must genuinely be an emergency, and a dispensation application to the First-tier Tribunal is still advisable after the fact. This route should not be used as a shortcut for works that could reasonably have been planned.
How we handle Section 20 at LT Property Services
We treat Section 20 compliance as a fundamental part of project management, not an administrative afterthought. For every qualifying works programme we manage, we maintain a complete consultation file that documents each stage, every notice served, all observations received, and the basis on which contractors were selected.
We take on Section 20 programmes that other agents have stalled: buildings where the consultation process was started incorrectly, or where leaseholder relationships have broken down over disputed works. If you are managing a building where a works programme has become complicated, we are experienced in finding a way forward.