What is Section 20?
If you are new to apartment living and you receive a Section 20 notification, you are likely to be baffled by its meaning and wondering what this strange document is in relation to?
Section 20, as it is known within the Property Management industry, is a consultation process in relation to major works at a development or apartment building, where the value of the works will exceed a set threshold of over £250 per apartment; or where the managing party looks to sign a qualifying long term agreement for the provision of services for over a 12 month period or longer.
For example: A development of 20 apartments requires major works to repair a section of the roof of their building at a cost of £8,000 to the service charge. This cost is split equally (as per the terms of their lease) meaning each individual would be required to contribute £400 each to the works. The management party may have already factored this cost into the budget for the current financial year, or if not, they may need to raise this cost as a levy to cover the cost of the works. Regardless of the funding, as the works will cost each apartment more than the £250 threshold limit, a section 20 process must now occur.
As a leaseholder, you have the right to be consulted if the landlord carries out major works for which you will be asked to pay. This Section 20 consultation process has three stages:
- First stage – You would receive a notice of the management parties intention to undertake works. This may come from your Landlords/Managing Agent or Resident Management Company board dependent on whom has the management obligations. The notice will outline what works are required and also invite you to put forward any suggestions/comments or recommendations for contractors that should be included to tender. You will have 30 days in which to respond to this notice, should you wish to comment. Following this the managing party will look to obtain a number of quotes for the works from independent contractors.
- Second stage – notification of estimates obtained by the managing party. This will outline details of the quotes obtained from the appropriate contractors and invite any commentary. This may be done either via written correspondence, or a meeting may be arranged to discuss the matter, which is followed up by written correspondence. You will have 30 days from receipt of the notification, in which to respond to this notice, should you wish to comment.
- Third stage – notification of award of contract. The contract is then awarded once the 30 day period has elapsed to the most appropriate contractor for the works and you are likely to be advised of the reasons as to why the contract was awarded, and the estimated date that the works will commence/complete.
The process takes approximately 2-3 months on average from start to finish, however there may be emergency occasions that arise where the Section 20 consultation process is not appropriate, and as a result, dispensation from this process may need to occur.
Dispensation – In this situation the management party would apply to the appropriate Property Tribunal to request dispensation from the Section 20 process to expedite the emergency works to be undertaken without instigating the above process. The management party would need to justify why the works need to be undertaken without consultation and the estimated costs and quotes received. This may be because a risk poses a threat to the integrity of the building or great risk to the residents residing within the building. The tribunal would then come to a decision following the presentation of the facts to either permit or deny dispensation.
Here at Realty we deal with Section 20 processes on a daily basis from simple redecoration projects to large scale remedial works such as replacing lifts, re-roofing, fire precaution works etc. We feel that long term maintenance plans are of the upmost importance to the developments within our care, and therefore we look to regularly engage with our developments and the residents to ensure that works are under taken pro-actively as opposed to reactively to prevent any large unexpected costs within the future.