Key facts at a glance
Section 20 of the Landlord and Tenant Act 1985 is the statutory requirement to consult with leaseholders before carrying out qualifying works or entering into qualifying long-term agreements where the cost to any individual leaseholder will exceed the relevant threshold. It is one of the most important procedural obligations in leasehold management — and one of the most commonly mishandled.
The consequence of getting it wrong is not a warning or an administrative adjustment. It is a hard financial cap on what can be recovered from leaseholders through the service charge, regardless of the actual cost of the works. On a significant external repairs programme or roof replacement, a failed Section 20 process can leave a shortfall of tens or hundreds of thousands of pounds that cannot be recovered.
This guide sets out the full Section 20 consultation process, what it requires at each stage, the common failures and their consequences, how dispensation works, and what leaseholders are entitled to do if the process has not been followed correctly.
Section 20 consultation is required in two distinct situations.
Works on a building or any part of it where the cost borne by any single leaseholder will exceed £250. This threshold applies per leaseholder, per works project.
Example: A block of 20 flats with works costing £100,000 — individual contributions of £5,000 each. Well above the threshold. Section 20 required.
Agreements entered into by the landlord for a term of more than 12 months where the cost to any individual leaseholder in any 12-month period will exceed £100.
Covers: Management contracts, maintenance contracts, long-term service agreements — not just one-off works.
The threshold applies per leaseholder, not to the total cost. A common misunderstanding is to compare the total works cost against the £250 threshold. On a block where costs are shared equally, the threshold is breached when the total cost exceeds £250 multiplied by the number of leaseholders.
All three stages must be completed correctly and in sequence. The stages cannot be run concurrently or in the wrong order. Works cannot begin — and costs above £250 per leaseholder cannot be recovered — until the process is correctly completed.
The process for qualifying long-term agreements differs slightly from the qualifying works process. Stage 1 requires a notice of intention describing the proposed agreement, inviting observations, and inviting leaseholders to nominate a person from whom the landlord should try to obtain a proposal. Stage 2 requires a notice providing at least two proposals, together with observations received at Stage 1.
Long-term agreements that have not been through the correct Section 20 process are qualifying agreements under which the landlord cannot recover more than £100 per leaseholder per year through the service charge. For a management contract or a multi-year maintenance agreement, this can be highly restrictive.
If the Section 20 consultation process is not followed correctly — or not followed at all — the amount recoverable from each leaseholder through the service charge is capped at £250 per qualifying works project, regardless of the actual cost.
Real-world example — 20-flat block
£195,000 unrecoverable. Falls on whoever was responsible for managing the Section 20 process.
The £250 cap cannot be waived by leaseholders. Even if individual leaseholders are willing to pay their full share, the cap applies as a matter of statute. The only route around the cap — short of completing a fresh Section 20 process for any remaining works — is to apply to the First-tier Tribunal for dispensation.
| Failure | Consequence |
|---|---|
| Works begun before Stage 1 notice served | Recovery capped at £250 per leaseholder for entire project. No retrospective fix. |
| Stage 1 notice not served on all qualifying leaseholders | Consultation invalid for those leaseholders. Process may need to restart. Cap applies. |
| Stage 1 notice does not describe the works with sufficient particularity | Notice defective. Leaseholders can challenge at Tribunal. Cap may apply. |
| Fewer than two estimates obtained at Stage 2 | Consultation flawed. Tribunal may disallow recovery above cap. |
| Leaseholder's nominated contractor not invited to tender without good reason | Leaseholder can apply to Tribunal. Recovery above £250 at risk. |
| Stage 2 statement not provided to leaseholders for inspection | Process defective. Observations period not validly commenced. |
| 30-day observation period not allowed at either stage | Process invalid. Works cannot validly proceed on full cost recovery basis. |
| Lowest estimate not chosen and no written reasons given within 21 days | Stage 3 non-compliance. Leaseholders can challenge the appointment. |
| Works materially different from those described in Stage 1 notice | New consultation required for the different works. Costs for undescribed works capped. |
| Section 20 started but not completed before works begin | Same as never starting — cap applies to costs incurred before completion of the process. |
Section 20ZA of the Landlord and Tenant Act 1985 allows the First-tier Tribunal to grant dispensation from all or any of the Section 20 consultation requirements. Dispensation is not automatic and is not available simply because consultation is inconvenient or time-consuming.
Genuine emergency — works urgently needed to prevent immediate danger or serious damage where waiting 60+ days would cause significantly greater harm. Roof collapse, structural failure, major water ingress.
Dispensation can be sought after the fact — where works were carried out without Section 20 compliance. Harder to obtain. The Tribunal assesses whether the failure to consult caused any prejudice to leaseholders.
Application to the First-tier Tribunal (Property Chamber). Must set out the works, explain why Section 20 requirements were not or cannot be met, and demonstrate why dispensation should be granted.
Emergency dispensation is not a shortcut for works that are merely urgent. The Tribunal distinguishes between works that are genuinely immediately dangerous — where dispensation is appropriate — and works that are merely time-sensitive or overdue. Misusing the dispensation process exposes the responsible party to costs and an adverse Tribunal finding.
If you are a leaseholder and you believe the Section 20 process for works on your building was not correctly followed, you have specific rights.
| Your right | What it means |
|---|---|
| Challenge the service charge at the First-tier Tribunal | You can apply to the Tribunal for a determination that the service charge is not payable, or not payable above the £250 cap, on the basis that Section 20 was not followed. The Tribunal can disallow recovery above the cap. |
| Withhold the disputed portion while proceedings are ongoing | You can withhold the portion of the service charge demand above £250 that you dispute, while Tribunal proceedings are ongoing. Take legal advice on how to do this correctly to avoid arrears proceedings. |
| Request a summary of costs and inspect accounts | You are entitled to request a written summary of the costs and to inspect the accounts, receipts, and relevant documents. This allows you to assess whether Section 20 was required and whether it was followed. |
| Make observations during the consultation | If Section 20 is being run now, you have the right to make observations at Stage 1 and Stage 2, and to nominate a contractor at Stage 1. Your observations must be considered. |
| Apply to the Tribunal if your nominated contractor was excluded | If you nominated a contractor at Stage 1 and they were not invited to tender without good reason, you can apply to the Tribunal to challenge the appointment made. |
Take legal advice before withholding service charge payments. Withholding service charge payments carries risk even where there is a genuine Section 20 dispute. If your challenge is unsuccessful, or if the amount withheld was not properly calculated, you may face arrears proceedings and associated costs.
We manage Section 20 consultation and major works for residential blocks across London and Essex. If you have inherited incomplete works or are unsure about the Section 20 position on your building, start with a conversation.
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