Section 20 Notices

The Commonhold and Leasehold Reform Act 2002 sets out revised safeguards against Landlords spending large sums on building repairs without proper consultation. These new regulations came into effect on 31 October 2003. We summarise the main changes as follows:

  1. The Law requires that the leaseholder must be consulted before the landlord carries out works above a certain value or enters into a long-term (more than 12 months) agreement for the provision of services.
  2. There are now to be two separate 30-day periods for observations, which means that any work has to be planned 3-4 months in advance. In an emergency, an application has to be made to the LVT for a dispensation.
  3. QUALIFYING WORKS: these are repairs, maintenance or improvements. The threshold for consultation is reached if the contribution from any one residential leaseholder exceeds £250.

    To calculate the amount for the building, you need to know the highest percentage paid by any flat.

    Such works are not covered by the Management Fee charged by Hurford Salvi Carr and Westminster Green Management Company normally directs Ashby Building Surveyors Ltd ( part of Hurford Salvi Carr) to perform the following procedure at their prevailing hourly charge rate:
  4. Stage 1: a Notice of Intention is given to each lessee. This gives a brief description of the works, and the reasons for doing them. It invites comments, and nominations of contractors from whom tenders should be asked. We will ourselves always propose at least two contractors, so there is no need for lessees to nominate anybody. Any response has to be given within 30 days.
  5. Stage 2: a Paragraph b Statement is then issued listing the estimates received and a summary of the comments received and the responses given to them. With this is also sent a Notice Accompanying the Paragraph b Statement which says where the estimates can be inspected, and invites written observations within 30 days.
  6. Stage 3: the law says that the landlord must have regard to written observations received within this second 30-day period.
  7. Stage 4: Unless the chosen contractor is the lowest tenderer, or the nominee of a Residents Association or a lessee, then a Notice of Reasons has to be given within 21 days of the award of the contract. There is no requirement for a response.
  8. You will see that we now will have to give you three or even four Notices instead of the original one, and the process will take three or four months instead of the previous one month. The time spent by our Building Surveyor will increase and this will be an additional cost of the works.
  9. QUALIFYING LONG-TERM AGREEMENTS: this is a contract or agreement for Service Charge matters for a term of more than twelve months. Although it is not spelt out in the Act, it is safest to assume that this includes ongoing contracts with no specific termination date. This could include managing agents’ agreements, lift or entry phone maintenance agreements, cleaning or gardening contracts, long-term insurance contracts, retainers to professionals. It does not include contracts of employment. The threshold for Consultation is reached if the contribution for any one residential leaseholder exceeds £100 in any year. This figure is to include VAT and any associated administration costs.

    To calculate the amount for the building, you need to know the highest percentage paid by any flat.
  10. Stage 1: a Notice of Intention is given to each lessee. This gives a brief description of the works or services, and the reasons for needing them. It invites written observations, and nominations of contractors from whom tenders should be asked. Any response has to be given within 30 days.
  11. Stage 2: the landlord must have regard to any observations made, and will then obtain estimates. He must also ‘try to obtain’ estimates from nominated contractors.
  12. Stage 3: the landlord must prepare at least two Proposals in a standard form using at least two of the estimates received. Notice of the Proposals is sent to each lessee with a copy of the proposals, and inviting observations within 30 days.
  13. Stage 4: Unless the chosen contractor is the lowest tenderer, or a nominee, then a Notice of Reasons has to be given within 21 days of the award of the contract.
  14. QUALIFYING WORKS UNDER A QUALIFYING LONG-TERM AGREEMENT: this is a new procedure. It might arise, for example, where the lift maintenance contractor has been appointed under the Qualifying Long-Term Agreement procedure, but as a result of an insurance inspection major Qualifying Works are required. A Notice of Intention has to be sent out, and there is a 30 day consultation period. There is no requirement for estimates as the Contractor has already been appointed. The threshold for consultation is £250 for any one lessee, as set out in paragraph 3 above.