LEASEHOLDER GUIDE
Section 20 of the Landlord and Tenant Act 1985 (as substituted by the Commonhold and Leasehold Reform Act 2002) requires landlords and managing agents to consult with leaseholders before carrying out qualifying works or entering into qualifying long-term agreements where the cost exceeds a prescribed threshold.
The consultation process exists to protect leaseholders by ensuring they are informed about proposed works, have the opportunity to comment, and can nominate alternative contractors. It is one of the most important procedural requirements in residential block management.
This guide explains when a Section 20 consultation is required, what each stage involves, and what happens if the process is not followed correctly.
A Section 20 consultation is required in two circumstances: when carrying out qualifying works and when entering into qualifying long-term agreements. The thresholds that trigger the consultation requirement are set per leaseholder, not as a total project cost.
Qualifying works include any maintenance, repair, or improvement work to the building or estate — such as roof replacement, external redecoration, window renewal, lift refurbishment, or structural repairs. Qualifying long-term agreements include contracts for services lasting more than 12 months, such as cleaning contracts, lift maintenance agreements, or insurance arrangements above the threshold.
The thresholds apply per leaseholder. In a block of 10 flats, a project costing £3,000 in total would mean each leaseholder's share is £300 (assuming equal apportionment), which exceeds the £250 threshold and triggers the consultation requirement.
The consultation process for qualifying works follows three prescribed stages. Each stage has specific requirements for the content of notices and the time allowed for leaseholder responses.
The first notice informs leaseholders that the landlord or management company intends to carry out qualifying works. It must describe the proposed works in general terms and explain why they are considered necessary.
Leaseholders are invited to make written observations about the proposed works and to nominate contractors they would like to provide estimates. Any nominated contractor must be considered alongside contractors sourced by the managing agent.
After obtaining at least two estimates (including any from nominated contractors), the landlord or managing agent must provide leaseholders with a statement setting out the estimates received. The statement must include a summary of any observations received during Stage 1 and the landlord's response to those observations.
Where a nominated contractor's estimate is not the lowest, the notice must explain why the landlord nevertheless proposes to accept a different estimate. Leaseholders are again invited to make written observations.
If the contractor selected is not the one who submitted the lowest estimate, and no leaseholder-nominated contractor is being used, the landlord must send a further notice within 21 days of entering into the contract. This notice must state the reasons for awarding the contract to the chosen contractor and summarise any observations received during Stage 2.
If the lowest-priced contractor or a nominated contractor is selected, this third stage is not required.
The consequences of failing to follow the Section 20 consultation process are significant. If the statutory procedure is not completed correctly, the maximum amount recoverable from each leaseholder for the works in question is capped at £250 — regardless of the actual cost.
For a major works project costing £100,000 across a block of 20 flats, failure to consult properly would cap the recovery to £250 per leaseholder (£5,000 total), leaving the management company with a shortfall of £95,000.
This cap applies even where the works were necessary and carried out to a reasonable standard. The consultation requirement is procedural — it is about following the prescribed process, not about the quality or necessity of the works themselves.
This is one of the most common areas where managing agents create problems for their clients. Errors in timing, notice content, or failure to properly consider leaseholder nominations can all invalidate the consultation process. It is essential that the agent managing your building has a thorough understanding of the Section 20 requirements and maintains a clear audit trail throughout.
In some circumstances, it may not be practical to complete the full consultation process — for example, where emergency works are required to address an immediate safety risk or where delay would cause further damage to the building.
In these cases, the landlord or management company can apply to the First-tier Tribunal (Property Chamber) for dispensation from the consultation requirements. The Tribunal will consider whether it is reasonable to dispense with the requirements, and may grant dispensation subject to conditions.
Dispensation is not automatic. The Tribunal will typically consider whether leaseholders have been prejudiced by the failure to consult and may require the applicant to demonstrate that the works were urgent and that leaseholders were kept informed even if the formal process was not followed.
Even when seeking dispensation, it is good practice to inform leaseholders about the works and the reasons for urgency as soon as possible. Tribunals are more likely to grant dispensation where leaseholders have been kept in the picture.
The Section 20 consultation process gives leaseholders specific rights at each stage.
At both Stage 1 and Stage 2, leaseholders have the right to make written observations about the proposed works and the estimates received. The landlord or managing agent must have regard to these observations before proceeding.
At Stage 1, leaseholders can nominate contractors they would like to provide estimates. The managing agent must obtain an estimate from any nominated contractor and include it in the Stage 2 statement. If the nominated contractor's estimate is not accepted, the reasons must be explained.
If a leaseholder believes the consultation process has not been followed correctly, or that the costs are unreasonable, they can apply to the First-tier Tribunal for a determination. The Tribunal can assess both the procedural compliance and the reasonableness of the charges.
COMMON QUESTIONS
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