Section 20 Landlord and Tenant Act 1985
Section 20 landlord and tenant act 1985 – what you need to know
Section 20, Landlord and Tenant Act 1985 is a piece of legislation that’s essential to gain a good understanding of if you’re the freeholder of an apartment block and/or manager, and are intending to undertake any qualifying work to your building.
Section 20 is designed – along with the entire Landlord and Tenant Act in general – to protect leaseholders by providing basic rights and minimum standards that can be expected of the property and services provided, and protect them from inflated service charges.
Focusing on this specific section of the legislation, let’s take a closer look at what you need to know to stay on the right side of the law when considering new works to your building…
Section 20 in three stages
In order to ensure that tenants are kept fully informed and in agreement with any alterations, improvements or repairs to their properties, section 20 landlords and tenant act 1985 sets out a three-stage consultation procedure.
This legislation comes into effect whenever a leaseholder is expected to contribute in excess of £250 towards the works – or over £100 in a financial year – where a qualifying long-term agreement is in place (an agreement for a period of more than 12 months between an independent contractor or organisation and the landlord), and must also include any Recognised Tenants’ (or Residents’) Association (RTA).
It’s important to note that all costing must include VAT, and landlords or management companies may find it difficult to recoup costs over £250 without this consultation process being adhered to.
Stage one – a notice of intention
A ‘Notice of Intention to Carry Out Works’ is the first stage and must be sent to all leaseholders and the secretary of the recognised tenants/residents association to inform them of the proposed work and the reasons it must be carried out. At this stage you should also offer them:
- The opportunity to make any observations of their own in writing within 30 days.
- The opportunity to suggest alternative contractors, from whom you must seek at least one competing quote.
Section 20 of the Landlord and Tenant Act doesn’t, however, require the tenants or RTA to state any existing relationship between them and their proposed contractor, but, equally, you as the landlord/manager can take that into account when choosing contractors, should you discover a relationship exists.
Stage two – notification of estimates
Once the 30 days’ notice have expired, it’s up to you as the landlord or management company to obtain a minimum of two estimates, with at least one of these being completely independent of yourselves and from those nominated (if any) by your leaseholders.
A ‘Statement of Estimates’ and ‘Notice to Accompany the Statement of Estimates’ must then be provided by the landlord to all contributing tenants and appropriate Recognised Tenants/Residents Associations.
Briefly, these should contain:
- Statement of Estimates – A detailed breakdown of all estimates received and a summary of the observations leaseholders/tenants made during the stage one.
- Notice to Accompany the Statement of Estimates – An invitation to leaseholders to view the estimates, along with details of when and where they can do so. It should also encourage the tenants to make written observations within 30 days and provide details of where to send them.
Stage three – Notification of award of contract
Once the contractor has been chosen, it’s up to the owner/management company to inform the appropriate leaseholders within 21 days of entering it. The landlord is within their rights to choose the estimate they feel is the best even if it’s not the cheapest, although they’ll be expected to explain their reasons for doing so in a ‘Notice of Reasons’ if anything other than the cheapest quote is selected. However, there’s no need to serve this notice if either the lowest quote or one nominated by a leaseholder is chosen.
A ‘Notice of Reasons’, if required, should give the reasons for the decision to choose a more expensive estimate, and offer leaseholders the opportunity to inspect and respond to them.
If the leaseholders deem the contractor choice of the landlord to have been prejudiced in any way, they may challenge the decision at Tribunal, where the landlord may be required to reduce the amount they claim from the tenants to offset that prejudice. The maximum service charge compensation the landlord may then request is the £250 for major works and £100 for a long-term agreement.
Staying on the right side of section 20 Landlord and Tenant Act 1985 is essential to the smooth running of your apartment block, and we hope that this brief rundown of the most important points will help you to maintain a healthy relationship between freeholder / Landlord and your tenants and leaseholders.