Anyone thinking of buying a leasehold property should be aware that they are liable to receive a section 20 notice, meaning that work on a building under a long-term agreement is planned that will lead to service charges over £250 for any one leaseholder >>
A section 20 notice is the means by which landlords (be they private or a local authority) can lawfully recover the full service charge for substantial works to a building, such as a roof repair or something equally significant. The good news is that landlords are required by law to consult their tenants in cases such as this. A section 20 consultation period will generally begin with a ‘notice of intention’, by which the landlord informs tenants of the proposed works. Leaseholders then have a minimum of 30 days to respond and raise any issues. After that, they will generally be given a notice of estimated costs of the works (at least two estimates) and a minimum of 30 days to respond to this new information, before a final decision will be made as to which contractor has been chosen.
Some people find themselves unable to pay the costs, which can sometimes amount to thousands of pounds and, in a worst-case scenario, may have to sell up because of this. It’s a major problem for sellers as potential buyers are understandably put off when told a section 20 is looming. If the worry of the cost doesn’t concern you, the possibility of ongoing repair and maintenance work when you move in may well do.
For more information and detail on section 20 in its entirety, go to lease-advice.org/publications/documents/document.aspitem=19
If the works are required and your lease states that you are liable to pay a share of the cost, then assuming those costs are reasonably incurred, they will be payable. Section 20 is an obligation on the landlord to consult before commencing the works. Without this consultation and the obligation on the landlord to ‘have regard’ to comments received during the consultation, leasehold owners would have little advance warning or input into the planned works. Completion of the consultation process does not mean that the costs are automatically merited: a process must be followed. If there is evidence that the charges are not merited, the matter can be discussed, mediated (lease-advice.org/services/mediation/) and dealt with at the Leasehold Valuation Tribunal (LVT) (rpts.gov.uk/our_services/ld.htm).
If you do have issues with a section 20 notice, you should raise them at the first stage of consultation. If there’s a group of you, pool your views and put them collectively to your landlord/manager and start a dialogue.
When viewing a property, have a look around to see if any work has been done recently, and ask other leaseholders when repairs and maintenance were last done. Ultimately, ask those managing the property what their plans are.