Quick Answers
When does Section 20 apply to maintenance contracts?
For long-term agreements (contracts over 12 months), Section 20 consultation is required where any leaseholder would contribute more than £100 per year. For one-off qualifying works, the threshold is £250 per leaseholder. Most routine maintenance contracts in blocks of more than a handful of flats will cross the £100 threshold and require consultation.
How many contractors should be invited to tender?
A minimum of three for most maintenance contracts. Section 20 consultation requires at least two independent quotes above the qualifying threshold. Three gives a meaningful price comparison and reduces the risk that one anomalously low quote skews the evaluation. For specialist contracts, approach four or five — some will decline to quote, and you need at least two valid submissions to run a credible tender.
Should contracts always go to the lowest price?
No. Price matters but should be weighted alongside relevant experience, references, insurance adequacy, method statements, and response time commitments. The lowest price may reflect lower service quality, underpricing that leads to corner-cutting, or inadequate insurance. A weighted evaluation produces better outcomes and is easier to justify if service charge costs are challenged at Tribunal.
Why tendering is a financial obligation, not a best-practice nicety: service charge costs must be reasonably incurred — this is a statutory requirement under the Landlord and Tenant Act 1985. Where a managing agent has never tested a maintenance contract against the market, and the cost turns out to be above the rate that competitive tendering would have produced, the excess may be found unreasonable by the First-tier Tribunal on a leaseholder's application. Competitive tendering is the primary mechanism by which an RTM company demonstrates that its maintenance costs are reasonable. It is also, in practice, the most reliable way to identify significant cost savings — untendered contracts are routinely found to be 15% to 40% above competitive market rates when first tested.
What this guide covers: which contracts should be tendered and when, the Section 20 consultation process that applies to qualifying contracts and works, the eight-step tender process from specification to appointment, how to evaluate tenders on a weighted basis beyond price, and the most common procurement mistakes made by managing agents and RTM companies in East London blocks.
Key Takeaways
The specification is the most important document in the tender process
A tender is only as useful as the specification it is based on. Where different contractors are pricing different scopes of work — because the specification is vague, incomplete, or open to interpretation — the resulting quotes are not comparable. Contractor A may include weekly communal cleaning while Contractor B has priced fortnightly visits. Comparing their headline prices tells you nothing useful. A clear, detailed specification that defines exactly what is required, at what frequency, to what standard, and with what response time commitments is the foundation of a meaningful tender. Producing this specification is work — but it is the most valuable part of the procurement process.
Section 20 is not an obstacle — it is a process to follow
Many managing agents and RTM companies avoid properly tendering long-term maintenance contracts because they believe Section 20 is complicated, time-consuming, and likely to produce leaseholder objections. In practice, Section 20 consultation for a maintenance contract is a straightforward two-stage process that takes approximately six weeks and rarely produces substantive challenges. Where leaseholders make observations through the consultation process, these must be considered and a written response provided — but the RTM company is not obliged to accept the cheapest quote nominated by a leaseholder if there are reasonable grounds for choosing differently. Section 20 is a transparency mechanism, not a veto.
The incumbent contractor should always be invited to retender
Where a maintenance contract is being retendered at the end of its term, the incumbent contractor should be included in the tender process. If they have performed well, there is a good case for retaining them if their pricing is competitive. If their pricing is not competitive, the tender gives the RTM company evidence to negotiate with the incumbent or to justify switching. Excluding the incumbent from a retender — and then appointing a new contractor without comparison — can leave the RTM company open to challenge as effectively as never tendering at all.
Check insurance and accreditation before inviting any contractor
Public liability insurance at a minimum of £2 million (and £5 million or more for higher-risk work) and employers liability insurance are non-negotiable requirements for any contractor working in a communal block. Many smaller contractors carry inadequate insurance or insurance that has lapsed. Ask for evidence of current insurance before any contractor is invited to tender — not as a post-appointment check but as a pre-qualification step. A contractor who cannot provide evidence of adequate insurance should not be invited to tender, regardless of price.
Fixed-price contracts with defined scope are far preferable to open-ended ones
Maintenance contracts that define a fixed annual price for a defined scope of services give the RTM company cost certainty and a clear basis for measuring contractor performance. Contracts that are priced on a time-and-materials basis, or that have wide "additional works at contractor's discretion" provisions, create opportunities for scope creep and cost escalation. Where fixed-price contracts are not possible for some elements (emergency reactive works, for example), these should be on pre-agreed labour and materials rates with any individual reactive instruction above a specified threshold requiring prior written approval from the managing agent.
Document the evaluation and keep the file
Every tender evaluation should be documented in writing — what was received, how it was scored, why the selected contractor was chosen, and what was done with the non-selected bids. This documentation is the RTM company's evidence that the procurement was conducted properly if service charge costs are challenged at Tribunal. A Tribunal that sees a written evaluation record demonstrating competitive tendering, a weighted scoring approach, and a clear rationale for the appointment is far more likely to find the cost reasonable than one that sees no evidence of any procurement process at all. Keep the evaluation record for a minimum of six years.
Which Contracts Need Tendering — and How Often
All significant maintenance contracts for a residential block should be subject to competitive tendering at appointment and at each contract renewal. The contracts most commonly found in East London blocks that are overdue for market testing:
| Contract type | Typical term | Retender frequency |
|---|---|---|
| Lift maintenance | 1–3 years | Every 3 years minimum. Lift maintenance pricing is highly variable and the market is competitive — blocks on long-standing contracts without retender are often significantly overpaying. |
| Communal cleaning | 1–2 years | Every 2–3 years. Often the easiest contract to retender given the number of contractors available. Consistent standards across contractor changes require a detailed specification. |
| Grounds maintenance | 1 year (seasonal) | Every 2–3 years. Retender in late summer/autumn ahead of the following year's growing season to allow time for mobilisation. |
| Fire alarm servicing | 1–3 years | Every 3 years. Must be carried out by an NSI Gold or SSAIB accredited contractor. Pre-qualify on accreditation before inviting to tender. |
| Emergency lighting | 1–3 years | Every 3 years. Often bundled with fire alarm servicing — check whether bundling or splitting produces better value for the specific block. |
| Communal boiler/heating | 1–3 years | Every 3 years. Gas Safe registration and relevant manufacturer accreditation are mandatory pre-qualification requirements. |
| Door entry and access control | 1–3 years | Every 3 years. Proprietary systems may limit contractor choice — check whether the system is open or proprietary before tendering. |
| Window cleaning (external) | 1–2 years | Every 2–3 years. For buildings above 4 storeys, check IRATA or IPAF accreditation for rope access or MEWP operation. |
Section 20: When Consultation Is Required
Section 20 of the Landlord and Tenant Act 1985 requires landlords — and RTM companies acting in the landlord's management role — to consult leaseholders before entering into qualifying long-term agreements or carrying out qualifying works.
Qualifying long-term agreements (contracts lasting more than 12 months): consultation is required where any leaseholder would contribute more than £100 per year under the agreement. In practice, any maintenance contract costing more than £100 multiplied by the number of flats per year will trigger this requirement. A cleaning contract costing £8,000/year in a 20-flat block = £400 per leaseholder — well above the threshold.
Qualifying works (one-off works rather than ongoing contracts): consultation is required where any leaseholder would pay more than £250 toward the works. Failure to follow the Section 20 process where it is required limits the amount any leaseholder can be charged under the service charge to £100 (for long-term agreements) or £250 (for qualifying works) regardless of the actual cost — potentially leaving the RTM company bearing the shortfall.
The Section 20 consultation process for a qualifying long-term agreement involves two stages:
- Notice of intention: a written notice to all leaseholders stating that the RTM company intends to enter into a qualifying long-term agreement, describing the proposed works or services, and inviting leaseholders to nominate a contractor to be invited to tender within 30 days.
- Notice of proposal: after obtaining at least two tenders (including any contractor nominated by a leaseholder where that nomination was received), a second notice to all leaseholders setting out the tenders received, inviting observations within 30 days, and stating which contractor the RTM company proposes to appoint and why — including where the cheapest tender is not selected.
The Tender Process: Eight Steps
Define the scope and produce the specification
Write a detailed specification of exactly what is required. For cleaning: frequency of visits, specific tasks at each visit, materials and equipment to be provided by the contractor, standards to be achieved, reporting requirements. For lift maintenance: full or partial service contract, response time for breakdowns, parts coverage, whether entrapment cover is included. The specification must be identical for all contractors — otherwise you are not comparing like with like.
Pre-qualify contractors before inviting them to tender
Before sending the tender documents to any contractor, confirm they meet the basic pre-qualification requirements: current public liability insurance at the required level, employers liability insurance, any sector-specific accreditation (Gas Safe, NSI Gold or SSAIB for fire systems, IRATA for rope access), and references from comparable contracts. Contractors who cannot meet pre-qualification requirements are not invited to tender. This saves time for everyone and keeps the tender list credible.
Issue Section 20 Notice of Intention (where applicable)
Where the contract will trigger Section 20 consultation, issue the Notice of Intention to all leaseholders before inviting tenders. Allow the 30-day observation and nomination period to run. Any contractor nominated by a leaseholder within the period must be added to the tender list (they can still be evaluated and rejected on merit, but they must be invited to quote).
Issue tender documents to all contractors simultaneously
Send the full specification, the pricing schedule (a structured form for contractors to complete), the evaluation criteria and their weightings, any required contract terms, and the tender deadline to all contractors at the same time. Setting a clear deadline — typically two to three weeks from issue for maintenance contracts — ensures quotes are received and can be compared on a level basis. Accepting late quotes, or giving some contractors more time than others, compromises the integrity of the process.
Conduct a site visit for all tenderers
For most block maintenance contracts, a site visit by the tendering contractors produces better, more accurate quotes than a paper exercise alone. Organise a single group visit at which all tendering contractors attend at the same time — this ensures all contractors see the same building in the same condition on the same day, and hear the same answers to any questions asked. Individual site visits at different times introduce inconsistency.
Evaluate tenders against the weighted scoring matrix
Score each tender against the criteria set out in the evaluation matrix (see the section below). Where the tender documents stated the evaluation criteria and their weightings — which they should have — apply those weightings consistently to every submission. Where tenders are incomplete or make material exceptions to the specification, these should be noted and may affect the score. Document the evaluation in writing.
Issue Section 20 Notice of Proposal (where applicable)
Where Section 20 applies, issue the Notice of Proposal to all leaseholders once the evaluation is complete. The notice must set out the tenders received (at minimum the price of each), identify the contractor the RTM company proposes to appoint, and explain why — including specifically why the cheapest option is not being selected if that is the case. Allow 30 days for observations. Respond to all observations in writing before proceeding with the appointment.
Appoint, notify unsuccessful tenderers, and file the documentation
Issue the appointment letter to the selected contractor and notify unsuccessful tenderers promptly. File the complete procurement record — specification, tender documents, all submissions received, evaluation matrix, Section 20 notices and responses, and the appointment letter — in the block's management file. Keep this for a minimum of six years. Notify all leaseholders of the appointment and the start date in the next routine management communication.
Evaluating Tenders: The Weighted Scoring Approach
A weighted evaluation matrix applies a score to each tender across multiple criteria, then weights those scores according to their relative importance. The weights should be disclosed to tenderers in the tender documents. A typical weighting for a block maintenance contract:
| Criterion | Suggested weight | What to assess |
|---|---|---|
| Price | 40% | Total annual cost for the specified scope. Check whether the price includes all elements of the specification or whether anything has been excluded. VAT treatment — confirm whether quoted prices are inclusive or exclusive. |
| Relevant experience and references | 25% | Evidence of comparable contracts (similar block size and type). References from current clients — follow these up with a phone call, not just a written reference. Length of time operating in the sector. |
| Method statement and approach | 15% | Quality of the written method statement describing how the contractor will deliver the specified services. Demonstrates understanding of the requirements and technical competence. A contractor who submits a generic method statement not tailored to the specification is a lower-quality submission regardless of price. |
| Insurance and accreditation | 10% | Adequacy of public liability and employers liability cover. Sector-specific accreditation. Health and safety policy. This is a pass/fail element at pre-qualification — at evaluation stage, additional credit for higher limits or additional relevant accreditations. |
| Response times and availability | 10% | Committed response times for routine attendance and emergency call-outs. Out-of-hours availability. Whether emergency cover is included in the contract price or charged separately. Geographic base and likely travel time to the block. |
Common Procurement Mistakes in Block Management
Rolling contracts over without retender
The most common mistake. A cleaning contract signed three years ago and auto-renewed annually has never been market-tested. The contractor knows this and has no pricing incentive. Simply sending the specification to three contractors and asking for quotes typically produces savings of 15% to 30% on long-standing untendered contracts.
Vague specifications that produce incomparable quotes
"Clean communal areas weekly" produces quotes that are impossible to compare meaningfully. Contractors will interpret the scope differently, visit duration differently, and include or exclude different tasks. A two-page cleaning specification produces genuinely comparable quotes. Spending an hour writing it saves months of disputes about what the contractor is and is not doing.
Selecting purely on price without evaluating other criteria
The cheapest lift maintenance contract may be from a contractor who does not hold the manufacturer's accreditation for the building's lift system, whose engineers are not factory-trained, and who uses non-OEM parts. Discovering this after appointment — when the lift breaks down outside contract hours — is expensive. Price is one criterion among several.
Failing to take up references
References provided by tenderers are the references the contractor wants you to read. Follow them up with a phone call and ask specific questions: Did the contractor attend at the agreed frequency? How did they handle problems? Would you reappoint them? A five-minute call with a reference contact tells you far more than a written letter.
Not checking insurance before inviting to tender
Discovering after appointment that a contractor's public liability insurance lapsed six months ago — when a leaseholder makes a claim for damage caused during a cleaning visit — is a significant liability for the RTM company. Insurance certificates should be checked at pre-qualification, not as an afterthought after the appointment is made.
Skipping Section 20 consultation on qualifying contracts
Where Section 20 applies and is not followed, the amount recoverable through the service charge from any leaseholder is capped at £100 per year (for long-term agreements) regardless of the actual contract cost. For a £15,000 annual cleaning contract across 20 flats (£750 per leaseholder), failing to consult limits recovery to £100 per leaseholder — leaving £13,000 unrecoverable. The consultation takes six weeks; the cost of skipping it can be far greater.
How Often to Retender — and What Triggers an Earlier Review
Most block maintenance contracts should be retendered every three to five years at a minimum. Contracts that have been in place for longer without market testing should be treated as an immediate priority — the longer a contract runs uncontested, the more likely it is that pricing has drifted above the competitive market rate.
Triggers that should prompt an earlier retender regardless of the contract term:
- Significant deterioration in contractor performance that has not been resolved through the contract's remedy mechanism
- A price increase at renewal that exceeds general market inflation by a material amount
- A change in the block's occupancy, specification, or requirements that the current contract does not reflect
- A new managing agent appointment — the incoming agent should review all active contracts as a priority and identify those that should be retendered in the near term
- A leaseholder challenge to service charge reasonableness that raises the cost of specific maintenance contracts as an issue
For how planned preventative maintenance drives what contracts your block needs and when, see Planned Preventative Maintenance: Why Your Block Needs a 5-Year Schedule. For the RTM director's role in overseeing contractor performance once appointed, see The RTM Director's Guide to Managing Contractor Performance. For how contract costs appear in properly prepared service charge accounts and budgets, see How to Set Your Block's Service Charge Budget.
Frequently Asked Questions
Section 20 consultation is required for qualifying long-term agreements (contracts over 12 months) where any leaseholder would contribute more than £100 per year, and for qualifying works where any leaseholder would pay more than £250. In practice, most maintenance contracts in blocks of more than a handful of flats will trigger the long-term agreement threshold. The process involves two notices to leaseholders with 30-day observation periods — typically around six weeks in total. Skipping it where it applies caps the amount recoverable through the service charge at £100 per leaseholder per year regardless of actual cost.
A minimum of three for most contracts, with four or five approached for specialist work where some may decline. Section 20 requires at least two independent quotes above the qualifying threshold. Three ensures a meaningful comparison and protects against one low outlier distorting the picture. Invite all contractors at the same time, with the same specification and the same deadline. For very specialist contracts where only two or three contractors in the market have the relevant experience, document why a wider list was not achievable.
No. Price should be weighted — typically at around 40% of the total evaluation score — alongside relevant experience, quality of the method statement, insurance adequacy, and response time commitments. The lowest tender may reflect lower service quality, inadequate insurance, or underpricing designed to win the contract and then be supplemented by additional charges during delivery. A weighted evaluation produces better outcomes and creates a defensible record if service charge costs are challenged at Tribunal. Where the cheapest tender is not selected, the reasons must be documented — especially where Section 20 applies, as the Notice of Proposal must explain the choice.
Every three to five years as a minimum. Contracts in place for longer without market testing are very likely to have drifted above competitive rates — contractors who retain accounts without competition have no incentive to keep pricing sharp. A new managing agent appointment should always trigger a review of all active contracts and an immediate retender of any that have not been tested against the market in the past three years. Earlier retender is appropriate where contractor performance has deteriorated significantly, where renewal pricing is materially above market inflation, or where a leaseholder challenge to service charge reasonableness raises the cost as an issue.
Yes — and in most cases they should be. The incumbent's knowledge that their contract is being retendered is itself a pricing incentive. Where they have performed well, including them gives the RTM company the option to retain them on merit if their pricing is competitive. Where their quote is not competitive but their track record is good, the comparison provides a basis for negotiation. Excluding the incumbent from a retender then appointing a new contractor without comparison can itself raise questions about the integrity of the procurement process — include them and evaluate their submission on the same basis as everyone else.
When did your block last tender its maintenance contracts?
Neon runs competitive tender processes for all significant maintenance contracts as a standard part of block management — specification, contractor pre-qualification, Section 20 consultation where required, weighted evaluation, and full documentation. If your current contracts have not been tested against the market in the past three years, there are almost certainly savings to be found. Talk to us.
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