We’re fast approaching the time of year when management companies are busy organising their service charge budgets, including preparing for any major works planned. However, if you’re planning to conduct major works, have you considered Section 20 of the Landlord and Tenant Act 1985 and what you need to do to remain compliant?
Ultimately Section 20 of the Landlord and Tenant Act 1085 is in place to make sure leaseholders are informed in advance of works that they will be required to fund, with details of the work conducted to qualify the cost of the works being carried out. They also provide leaseholders with the opportunity to nominate a contractor.
This sounds reasonable, however, the major problem with this procedure is that a small administrative mistake can mean that the landlord cannot recover more than £250 from each leaseholder, potentially leaving them with a large shortfall in their estate’s accounts.
Brady Solicitors’ Adam Hollis provides details on the notices that need to be supplied to obtain the contributions required from the leaseholders.
There are at least two and possibly three notices that leaseholders must receive in the following order:
- Notice of Intention:
and must be given to each leaseholder, describing the works, or saying where and when a description of the works may be inspected, stating the reasons for the works and specifying when and where observations and nominations for contractors should be sent. The expiry date for this is 30 days from the date of the notice. It should also inform the leaseholders of their right to nominate a contractor. Every leaseholder must be given an initial notice detailing the works or stating where and when a description of works may be inspected. Additionally, it should include any reasons for the works and inform the leaseholder of their right to nominate a contractor to carry out the work. Also, the notice should specify when and where observations and nominations should be sent, as well as the expiry date, which is a minimum of 30 days from the date the notice is served.
- Notice of Estimates:
Within this notice the landlord must issue a statement to the leaseholders that includes two or more estimates, any responses, and a summary of the observations. It’s important to note that any nominees’ estimates must be included. As with the notice of intention, it must also state where and when estimates can be inspected and where and when the observations must be sent, allowing a minimum of 30 days from the date the notice is served.
- Notice of Award of Contract:
This notice must be given within 21 days of entering into any contract stating the reasons for the award of the contract, but only if the chosen contractor did not provide the lowest estimate and was not nominated by a leaseholder.
If the strict procedure detailed above is not followed, the landlord will only be able to recover £250 per leaseholder in relation to major works.
In addition to the required notices, we highly recommend an open line of communication with leaseholders during the Section 20 consultation procedure, as it is crucial to secure the contributions you require for your planned projects. Brady Solicitors can support you through every step of the consultation process, guiding you through all the required stages.