As an independent property manager or RMC looking to undertake a major works project for the first time, you need to fully understand your legal obligations to consult with your leaseholders before starting the works if you want to recover the costs through your service charge demands. Brady Solicitors’ Harpreet Lehal explains the consultation process.
Section 20 of the Landlord & Tenant Act 1985 sets out a three-stage consultation procedure for major works projects, which must be strictly followed when carrying out works of repair, maintenance or improvements to your building where the contribution from each leaseholder is greater than £250. It also applies to qualifying long-term agreements, such as cleaning or gardening contracts of 12 months or more where the contribution from each leaseholder exceeds £100.
Section 20 major works consultation process
Step 1 – The first step of the consultation process is to serve a “Notice of Intention to Carry Out Works” upon all leaseholders. The Notice must describe the proposed works, state the reasons for proposing such works and invite leaseholders to make written observations to a specific address within 30 days. In their response, leaseholders can make comments and put forward their own contractors from whom the landlord must obtain estimates for the work.
Step 2 – The second notice, called the “Statement of Estimates” should be served. Once the initial 30 day consultation period has expired, the landlord is required to obtain at least two cost estimates for the works, including at least one from any nominations received from the leaseholders, for comparison. The Statement of Estimates sets out the details of the estimates that have been obtained along with a summary of the observations received within the consultation period. All estimates must be available for inspection by the leaseholders, including those obtained from nominated contractors, and the notice must specify when and where they can be inspected. Leaseholders then have 30 days in which to make any written observations.
Step 3 – A third “Notice of Reasons” is to be served which states the reasons for awarding the contract when the chosen contractor is not the cheapest quote, or if a nominated party is not selected.
Consequences of not following the major works consultation process
In the event that the consultation procedure is not followed correctly and you are successfully challenged at the First Tier Tribunal (FTT), then the maximum amount recoverable from each leaseholder is £250 for major works and £100 for long-term agreements. It is therefore prudent to ensure that all notices have been served correctly and within the correct time limits.
Get your major works project off on the right foot
Brady Solicitors’ property management experts can guide you through the Section 20 consultation process and ensure the required notices are served correctly and on time. Our specialists will also provide advice on how to handle any objections to the proposed works from your leaseholders.
If you’re thinking about a major works project, contact Brady Solicitors and we’ll help you get started.
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