Section 20 Notice Explained: Costs, Rules and Leaseholder Rights

A Section 20 notice is the formal consultation a landlord, freeholder, RTM company or resident management company must carry out before recovering the cost of major works or a long-term contract through the service charge. Consultation is required where any single leaseholder would pay more than £250 towards qualifying works, or more than £100 a year under an agreement lasting more than 12 months. Skipping it caps recovery at those same figures unless the First-tier Tribunal grants dispensation.

If you own a leasehold flat, sooner or later an envelope marked "Notice of Intention - Section 20 of the Landlord and Tenant Act 1985" lands on your doormat. It looks formal, it talks about thresholds and consultation, and most leaseholders quietly file it in the "deal with later" pile. They shouldn't. A Section 20 notice is the only realistic window leaseholders get to influence what they're about to be billed for.

What is a Section 20 notice?

A Section 20 notice is a formal consultation notice served under section 20 of the Landlord and Tenant Act 1985 and the Service Charges (Consultation Requirements) (England) Regulations 2003. It tells leaseholders what work or contract is proposed and why, and gives them a set period to respond before the cost can be recovered in full through the service charge.

When is Section 20 consultation required?

Section 20 forces the landlord or managing agent to consult leaseholders before recovering certain costs through the service charge. It applies in two situations:

• Qualifying works - works on a building or other premises where any individual leaseholder's contribution would exceed £250.
• Qualifying long-term agreements - any contract lasting more than 12 months where any individual leaseholder's contribution in an accounting period would exceed £100.

Examples in real life: redecorating a stairwell, replacing a roof, installing a new entry system, signing a multi-year cleaning or lift maintenance contract. Routine repairs under those thresholds don't need a Section 20.

What is the £250 threshold?

The £250 figure is measured per leaseholder, not per building. Consultation is required if the relevant contribution of any one leaseholder to the works would be more than £250, based on the share each lease actually requires them to pay. Routine repairs below the threshold don't require consultation - but a competent managing agent still keeps leaseholders informed.

What is the £100 threshold for qualifying long-term agreements?

A qualifying long-term agreement is an agreement entered into by or on behalf of the landlord for a term of more than 12 months, where any one leaseholder's contribution in an accounting period would exceed £100 - for example a three-year lift maintenance or cleaning contract. The test is about the contract, not individual jobs. The principal exclusions under regulation 3(1) of the 2003 Regulations are:

• contracts of employment;
• certain management agreements made by a local housing authority with a tenant management organisation or a body established under section 2 of the Local Government Act 2000;
• agreements between a holding company and one or more of its subsidiaries, or between two or more subsidiaries of the same holding company;
• agreements for a term not exceeding five years entered into when there are no tenants of the building or premises concerned (for example, on a new development before any flats are sold).

These are the principal exclusions, not an exhaustive list of every exception: regulation 3 also includes transitional provisions. The exclusions are narrow and turn on their exact wording, so check the regulation itself (linked in the sources below) before relying on one.

What it covers

Qualifying worksOne-off works on the building

Qualifying long-term agreementAgreements for a term of more than 12 months

Threshold

Qualifying worksOver £250 for any one leaseholder

Qualifying long-term agreementOver £100 for any one leaseholder in an accounting period

Usual stages

Qualifying worksNotice of Intention, Statement of Estimates, Notice of Reasons if needed

Qualifying long-term agreementNotice of Intention, Notice of Proposals

Cap if not consulted

Qualifying works£250 per leaseholder

Qualifying long-term agreement£100 per leaseholder per accounting period

Who is legally responsible for consulting

The duty sits with the landlord under the lease - which in practice means the freeholder, the Right to Manage company, or the resident management company, depending on who is entitled to demand the service charge. A managing agent normally drafts, serves and administers the consultation, but the legal responsibility, and the consequence of getting it wrong, stays with the landlord entity. If your block is RTM-managed, that is your own directors.

This matters when directors take over a block or change agent mid-project. A part-completed consultation does not transfer cleanly, and stages served by a previous agent should be checked before the next notice goes out. See Section 20 for RTM companies and changing managing agent.

What are the stages of Section 20 consultation?

The procedure is set out in the Service Charges (Consultation Requirements) (England) Regulations 2003. For standard qualifying works that do not require public notice, it runs as follows:

Stage 1 - Notice of Intention

The landlord describes the proposed works and the reasons for them. Every leaseholder who may be charged, and any recognised tenants' association, must receive it. Leaseholders have 30 days to make written observations and to nominate a contractor. The landlord must have regard to the observations - which means considering and responding to them, not simply filing them.

Stage 2 - Statement of Estimates

The landlord must try to obtain an estimate from any contractor nominated by leaseholders, and must obtain at least two estimates, at least one of which is from a person wholly unconnected with the landlord. A statement setting out the estimates, together with a summary of the observations received and the landlord's response to them, is then made available. A further 30-day period runs for observations on the estimates.

Stage 3 - Notice of Reasons (award)

If the landlord awards the contract to a contractor who is neither the lowest estimate nor a leaseholder nominee, it must give written reasons within 21 days of entering into the contract. If the lowest estimate or a nominated contractor is chosen, no notice of reasons is required.

Where the value is high enough to require public procurement notice, an additional stage applies. Realistic end-to-end timings, including specification and tender, are set out in Section 20 timelines.

Long-term agreements are different

A qualifying long-term agreement is a contract lasting more than 12 months where any one leaseholder would contribute more than £100 in an accounting period - a lift maintenance, cleaning or grounds contract, for example. The consultation is a two-stage process: a Notice of Intention, then a Notice of Proposals setting out the proposed contracts and estimated costs, each with its own 30-day observation period. Where works are carried out under an existing qualifying long-term agreement, a separate and slightly different consultation applies to those works.

How long does Section 20 consultation take?

There is no single fixed timetable. The regulations set minimum observation periods, but the overall length depends on the type of consultation, how long specification and tendering take, and whether leaseholders nominate contractors. For standard qualifying works (no public notice), a typical sequence looks like this:

Notice of Intention - observations and nominations

Statutory minimum30 days

Indicative estimate30 days

Obtaining estimates (tender)

Statutory minimumNo set period

Indicative estimateAround 4-8 weeks

Statement of Estimates - observations

Statutory minimum30 days

Indicative estimate30 days

Notice of Reasons (only if needed)

Statutory minimumWithin 21 days of entering into the contract

Indicative estimateWithin 21 days

The "indicative estimate" figures, including the 4-8 week tender period, reflect common practice only. They are not statutory deadlines; the only fixed periods are the 30-day observation periods and the 21-day period for a notice of reasons.

The two observation periods alone mean around two months as a minimum. Allowing for the specification and tender, an overall process of roughly three to six months from first notice to contract is a common indicative estimate, not a legal requirement - some take longer. Long-term agreements and public-notice consultations follow different steps. More detail is in how long Section 20 consultation takes.

What happens if the landlord fails to consult properly?

If consultation is not carried out properly, the amount the landlord can recover through the service charge from each leaseholder is limited to £250 for the qualifying works, or £100 per accounting period for the long-term agreement - regardless of what the works actually cost. The works still have to be paid for; the shortfall simply cannot be passed on. For an RTM company or RMC, that shortfall lands on the company and, ultimately, on the members.

Can the First-tier Tribunal dispense with consultation?

Yes. The cap is not a penalty for a technical slip. Under section 20ZA of the Act, the First-tier Tribunal (Property Chamber) can dispense with all or part of the consultation requirements where it is satisfied it is reasonable to do so. The application can be made before or after the works, but dispensation is discretionary - it is never automatic. Following Daejan Investments Ltd v Benson [2013] UKSC 14, the main question the Tribunal asks is whether leaseholders suffered relevant prejudice because of the failure - not how serious the breach looked. The Tribunal may grant dispensation subject to conditions, such as a reduction in the recoverable sum or the landlord paying the leaseholders' reasonable costs, or it may refuse it. It is a remedy, not a shortcut. See emergency works and dispensation.

Consultation is also only one of the hurdles. The charge must be permitted by the lease, must be reasonable under section 19, and must be demanded within 18 months of the cost being incurred unless a section 20B notice has been served. Passing Section 20 does not make an unreasonable cost recoverable.

Can leaseholders challenge proposed works or costs?

Yes, in two ways: by making written observations during consultation, which the landlord must have regard to, and by applying to the First-tier Tribunal under section 27A to decide whether a service charge is payable and reasonable. In summary:

• You can submit written observations on the scope, the cost or the timing.
• You can nominate your own contractor at Stage 1.
• You can ask to inspect the estimates and supporting documents.
• You can challenge unreasonable charges at the First-tier Tribunal afterwards.
• You cannot veto the works - consultation is not a vote.
• You cannot withhold service charges as protest; that breaches your lease and risks forfeiture proceedings.

Common misunderstandings

• "The £250 is the total cost of the works." It is not. The threshold is the contribution of any one leaseholder. A £3,000 job in a four-flat block usually needs consultation; the same job across 40 flats may not.
• "Three quotes means three random builders." The regulations require at least two estimates, at least one from a contractor wholly unconnected with the landlord, plus an attempt to price any leaseholder nomination. A scratch quote from a friend does not satisfy Section 20.
• "Section 20 only applies to freeholders." It applies equally to RTM companies and resident management companies. If your block is RTM-managed, your own directors run the consultation.
• "Emergency works don't need consultation." They do. The route is a dispensation application under section 20ZA - see emergency Section 20 works.
• "Splitting the job keeps it under the threshold." Artificially dividing a single programme of works to avoid consultation is a well-known argument at tribunal and rarely succeeds.
• "The surveyor's fee triggers consultation." Professional fees are usually treated differently from works to the building - see does Section 20 apply to professional fees?

Practical tips when a notice arrives

• Read it the day it arrives - the 30-day period runs from the date of the notice, not the day you open it.
• Ask for the supporting specification or scope of works in writing if it isn't enclosed.
• If you think the cost looks high, get an indicative quote from a contractor of your own and submit it formally within the observation period.
• Talk to other leaseholders. Joint, written observations carry more weight than individual ones.
• Ask how the works will be funded - reserve fund, one-off demand or a payment plan - before the contract is awarded.
• If your block has an RTM company or RMC, raise it with the directors; they are the ones running the consultation.

What should RTM and RMC directors know?

If your building is run by a Right to Manage company or a resident management company, the company is the party that must consult - so the directors carry the responsibility, even where a managing agent prepares the notices. Directors should in particular:

• Check whether any single leaseholder's share of planned works will exceed £250, using the actual lease percentages rather than an equal split.
• Check multi-year contracts (cleaning, lifts, fire alarm maintenance, insurance-related services) against the £100-a-year test before signing.
• Keep a record of every notice, observation and response, so the consultation can be evidenced if it is challenged.
• Plan funding early - reserve fund, one-off demand or instalments - because consultation does not change what leaseholders must eventually pay.
• Review any part-completed consultation inherited from a previous landlord or agent before serving the next notice.

Where a building is badly managed and the landlord is not putting things right, leaseholders have other routes too: Right to Manage lets qualifying leaseholders take over management without proving fault, and a Section 24 Tribunal-appointed manager can be sought where there are serious management failings.

How managing agents should coordinate Section 20 works

A well-run Section 20 is project management, not paperwork for its own sake. The works should be specified in enough detail that the estimates received are genuinely comparable; the tender should go to contractors who actually work in residential blocks rather than the cheapest name in a directory; observations should be answered properly rather than acknowledged; and every stage should be recorded accurately so the consultation can stand up to challenge later.

How we run Section 20 at East Valley

For the blocks we manage across Greater London and Essex, we issue Section 20 notices in plain English, attach the full scope of works, and write back to every leaseholder who submits observations rather than treating it as a tick-box exercise. Where leaseholders nominate a contractor, we obtain a genuine quote and put it on the comparison table. We take no commission from contractors. If you want that run on your block, see Section 20 consultation support.

This article is a general guide, not legal advice. Consultation thresholds and procedure are set by the Service Charges (Consultation Requirements) (England) Regulations 2003 under section 20 of the Landlord and Tenant Act 1985. For specific situations, consult a solicitor or the Leasehold Advisory Service (LEASE).