Understanding Section 20 on leasehold properties
Section 20 is a clause in the Landlord and Tenant Act 1985. Its intention is to protect leaseholders from paying unnecessarily large sums of money for work carried out to their property.
The freeholder of any property requiring repair works, maintenance or general improvement should have knowledge of Section 20.
Drawn up for you, is our simple guide to what that entails, and how you can provide your own awareness to the rules and regulations surrounding it.
What is the Section 20 procedure for landlords of leasehold properties?
There are three steps to the Section 20 procedure. Broken down, they are:
· Step one: Notice of Intention to Carry Out Works
When you begin Section 20 procedures, your first step would be to write a Notice of Intention to Carry Out Works. This details your proposed works or maintenance contracts, and why they are required. Even if the works are proposed by the leaseholders, this notice should still be given.
From there, your leaseholders have 30 days from receipt of the notice to make suggestions or comments. Leaseholders are also able to nominate contractors to carry out the works, all of which must be considered for the tender process.
Only if the contractor in question is not eligible to carry out the works, for example if they lack liability insurance, can you refuse to consider a leaseholder's suggestion for a contractor.
· Step two: Statement of Estimates
If an agreement has been reached to carry out the works, you must then provide your leaseholders with a Statement of Estimates. This will include the timescale and cost of the proposed works.
These estimates are gathered through a tender process with at least two contractors, with at least one nominated by you, and at least one other nominated by one or more of your leaseholders.
Your leaseholders then have 30 days to comment on those estimates and they also have a legal right to view any estimates from considered contractors which you didn't include in the Statement of Estimates.
The only time you can refuse to consider a leaseholder's suggestion for a contractor, is if that contractor in question is not eligible to carry out the works, to use the same example above, if they had no liability insurance.
· Step three: Notice of Reasons
Here's the point where things can go one of two ways, depending on which contractor you choose.
If your option was to go with the contractor who provided the cheapest estimate, or one chosen by your leaseholders, you can award the contract and move forward with the works. This will complete the Section 20 process and you can then request contributions from your leaseholders.
However, if you didn't choose the contractor with the cheapest estimate or a contractor chosen by the leaseholders, you must provide leaseholders with a Notice of Reasons. This explains your decision, and must be sent out within 21 days of entering into the contract.
The entire Section 20 process will complete if your leaseholders do not object to your reasons. If they do, they can apply to the First-Tier Tribunal to determine liability to pay and reasonableness of service charges.
Sandersons go above and beyond
Whilst the letter of the law is paramount and adhered to, we have a slightly different way of approaching the entire process.
First and foremost, we are committed to Section 20 by being clear and open with our communications. We value an open book, with people always welcome to approach us and ask questions or raise concerns.
We like to hold 'townhall meetings.' These give us the opportunity to with speak the specific residents who will be affected by any works carried out before any final decisions are made.
We value the power of the voice, even those who speak individually, and we are always there to listen to our community. If you would like to learn more about our Block Management services please contact our dedicated team on 01227 517 777 or send us a message.
