10 January 2019

Property Management – Risk Insights

Ensure your Compliance with Section 20 of the Landlord & Tenants Act 1985

As a property manager or letting agent, it’s crucial to look for ways you can improve the property for residents. Whether it be exciting improvements, vital repairs or some simple routine maintenance, making these changes can help ensure an attractive, safe and successful property.

However, with these changes comes necessary compliance. Section 20 (S20) of the Landlord & Tenants Act 1985 (applies to landlords/freeholders, right to manage companies, resident management companies and their managing agents in England and Wales) states that landlords or their agents are required to participate in set consultation procedures with leaseholders before carrying out works on property above a certain value. Failure to comply with this regulation can result in costly consequences and frustrated residents, ultimately harming your business reputation. Keep your property successful and residents satisfied by ensuring awareness of S20 and following consultation procedures.

What is Section 20?

S20 is meant to provide protection to leaseholders from having to pay large amounts of money for works that occur to their building. Essentially, it states that the landlord or letting agent of a property must follow specific consultation procedures before starting work that would require any one leaseholder to contribute an estimated £250 or more. This estimated cost must include VAT and consultant fees.

If the landlord or letting agent doesn’t follow these consultation procedures to inform leaseholders before work begins, the leaseholders’ contribution to the cost of work will be capped. This means that the landlord or letting agent would then only be able to receive £250 from each leaseholder for the final bill, regardless of the total work cost. Noncompliance can also result in loss of income and negligence claims.

Keep your property successful by ensuring awareness of Section 20 and following proper procedures.

Section 20 Consultation Procedures

There are three primary consultation procedures required under S20. They include the following:

  • Stage One: Notice of Intention—First, you must serve a notice to the leaseholder(s) that details the proposed works and why they are necessary for the property. This notice should also welcome commentary and contractor nominations. You must give leaseholders 30 days to respond.
  • Stage Two: Estimate Statement—As soon as you receive estimates, you must provide another notice to all leaseholders that includes the costs. This notice should also welcome commentary and give leaseholders 30 days to respond.
  • Stage Three: Notice of Reasons—Once the contract for the works is rewarded, you must send a final notice if you didn’t choose the least expensive estimate or contractor nomination. You must include justification for the option you chose.

For more information, contact R K Henshall today on 01270 758070.

The content of this Risk Insights is of general interest and is not intended to apply to specific circumstances. It does not purport to be a comprehensive analysis of all matters relevant to its subject matter. The content should not, therefore, be regarded as constituting legal advice and not be relied upon as such. In relation to any particular problem which they may have, readers are advised to seek specific advice. Further, the law may have changed since first publication and the reader is cautioned accordingly. © 2019 Zywave, Inc. All rights reserved.

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