Major Works and Section 20

Major works are works of repair, maintenance, or improvement to the building or common parts that result in a service charge demand. When the landlord proposes qualifying works that will cost any one leaseholder more than £250, a statutory consultation procedure applies under section 20 of the Landlord and Tenant Act 1985, as amended by section 151 of the Commonhold and Leasehold Reform Act 2002. This process is commonly referred to as Section 20 consultation. A landlord who carries out qualifying works without following it cannot recover more than £250 from any one leaseholder — regardless of the actual cost of the works.

When Consultation Is Required

The Section 20 consultation requirement is triggered when the landlord proposes to carry out qualifying works that will result in a contribution from any one leaseholder of more than £250. The £250 threshold applies to each leaseholder individually — not to the total cost of the project. A single large project affecting twenty leaseholders, each of whom would pay £300, triggers the consultation requirement even if individual contributions are modest.

Qualifying works are works on the building or any other premises that the landlord is obliged or entitled to carry out under the terms of the lease. The definition is broad and covers most repair, maintenance, and improvement works charged through the service charge.

A separate but related consultation requirement applies to qualifying long-term agreements — contracts for goods or services lasting more than 12 months under which the contribution from any one leaseholder in any 12-month period would exceed £100. This includes contracts with managing agents, gardening contractors, and cleaning companies where the threshold is met. The consultation process for long-term agreements follows a similar two-stage structure under the Service Charges (Consultation Requirements) (England) Regulations 2003.

The Three-Stage Process

The Section 20 consultation for qualifying works follows three stages under the Service Charges (Consultation Requirements) (England) Regulations 2003 (SI 2003/1987).

Stage 1 — Notice of Intention. The landlord must serve a notice on each leaseholder and on any recognised tenants' association describing the proposed works, or explaining why a full description cannot yet be given. The notice must invite observations and specify the address to which they should be sent. Leaseholders have 30 days from service of the notice to make observations and to nominate a contractor from whom the landlord must seek an estimate. The landlord must have regard to observations received.

Stage 2 — Notification of Estimates. The landlord must obtain at least two estimates for the works — one from a contractor wholly unconnected to the landlord, if any observations were received in Stage 1. The landlord must prepare a paragraph-by-paragraph statement of the estimates and serve it on leaseholders and any recognised tenants' association, with a further 30-day period for observations. If a leaseholder nominated a contractor in Stage 1, the landlord must seek an estimate from that contractor and include it in the statement if obtained.

Stage 3 — Notification of Award. Where the landlord awards the contract to a contractor who is neither the lowest-cost estimator nor a leaseholder-nominated contractor, the landlord must notify each leaseholder and any recognised tenants' association of the reasons for the choice. This notification must be given before or within 21 days of the award.

Observations made by leaseholders at either stage must be considered by the landlord but need not be followed. The landlord is not required to accept the cheapest estimate or the leaseholder-nominated contractor — but must give reasons if it does not.

The £250 Cap

If the landlord carries out qualifying works without following the Section 20 process, or without following it correctly, the amount recoverable through the service charge from any one leaseholder is capped at £250. This is the statutory consequence of non-compliance — not a penalty, but a limit on recovery. The landlord may have spent more, but cannot charge more than £250 per leaseholder for works undertaken without proper consultation.

Procedural defects — such as failing to allow the full 30-day observation period, failing to include the required information in a notice, or omitting to seek an estimate from a leaseholder-nominated contractor — may each constitute a failure to comply. The cap applies in full where any mandatory stage was omitted or materially defective.

A leaseholder may rely on the £250 cap at the First-tier Tribunal by applying under section 27A of the Landlord and Tenant Act 1985 for a determination that the charge above £250 is not payable. The tribunal will determine whether the consultation requirements were met. The cap does not apply where the tribunal grants a dispensation from the consultation requirements — see LHF/03.4 below.

Tribunal Dispensation

Under section 20ZA of the Landlord and Tenant Act 1985, the First-tier Tribunal may grant dispensation from all or any of the Section 20 consultation requirements where it considers it reasonable to do so. A landlord who has not followed the consultation procedure may apply for dispensation to avoid the £250 cap on recovery.

Dispensation is not automatic. In Daejan Investments Ltd v Benson [2013] UKSC 14, the Supreme Court held that the central question in dispensation applications is whether the failure to consult caused the leaseholders to suffer any relevant prejudice — that is, whether they lost out on something they would have gained from the consultation process. If the leaseholders were not prejudiced by the failure (for example, because the works were emergency in nature, or because they could show no contractor would have been cheaper), the tribunal may grant dispensation, potentially subject to conditions.

Where dispensation is sought in respect of emergency works, the landlord should be able to demonstrate why there was no time to follow the consultation process. The tribunal retains discretion to attach conditions to any dispensation, including requiring the landlord to bear some or all of the costs of the leaseholders' participation in the dispensation application.

Challenging Major Works Charges

Where the Section 20 consultation was carried out, the resulting service charge may still be challenged on reasonableness grounds under section 27A of the Landlord and Tenant Act 1985. Consultation compliance and charge reasonableness are separate questions. A consultation that followed all procedural steps does not preclude a challenge to the amount or necessity of the works.

Grounds for challenge include: that the works were carried out at an unreasonable cost; that the works were unnecessary; that the works are not covered by the service charge provisions of the lease; or that a procedural defect in the consultation renders the full amount irrecoverable. For major works disputes, a report from a chartered surveyor is frequently the most effective evidence — setting out an opinion on whether the specification was appropriate, whether the cost was market rate, and whether the works were necessary.

See LHF/02 — Challenging a Service Charge for the general process and evidence considerations.