Section 20 & Leaseholder Consultation - your questions answered

Our Technical Partnerships team are regularly advising customers on their Section 20 consultations. We’re able to help explain the process in more detail and advise on consulting with leaseholders when using a framework. We also help customers to carry out their consultation at the beginning of a framework procurements to save you time down the line.

We’ve answered your top Section 20 questions in the FAQs below. They’re not just about S20 and frameworks – but will help you with your leasehold consultation for other projects as well.

If you’d like to learn more about our technical support services please contact a member of the team today – contact us.

We’ve also prepared a number of documents which may be of use to you –

• S20 & Frameworks
• S20 & Frameworks Flowchart – Qualifying Long Term Agreements
• S20 & Framework Flowchart – Qualifying Works

Section 20 Consultation - your questions answered

What are the key pieces of legislation?

• Section 20 of the Landlord and Tenant Act 1985.
• Revised by Section 151 of the Commonhold and Leasehold Reform Act 2002
• Consultation to be done under the Service Charges (Consultation Requirements) (England) Regulations 2003

What are the basic principles underpinning this whole area?

1. Refer to the lease to understand what applies in each building.
2. Variable service charges apply for Services, repairs or improvements, maintenance, insurance, and landlords' costs of management, plus improvements.
3. Costs must be reasonably incurred, and works must be of a reasonable standard.

What is a Qualifying Long Term Agreement (QLTA)?

Qualifying Long Term Agreement (QLTA) is for more than 12 months costing over £100 per tenant.

What does "Qualifying Works" mean?

Qualifying Works are works lasting up to 12 months costing over £250 per tenant. 

When should consultation be undertaken?

If the works last 12 months costing over £250 per tenant. If good, services or works last more than 12 months (QLTA) and cost over £100 per tenant.

What are the key questions to ask to find out which consultation route to take?

1. What is the value of the contract / agreement?
2. How long will the contract / agreement last?

What are the different consultation procedures? 

• Schedule 1 - QLTA no public notice required
• Schedule 2 – QLTA public notice required
• Schedule 3 – Qualifying Works under QLTA
• Schedule 4 Part 1 – Qualifying Works public notice required
• Schedule 4 Part 2 – Qualifying Works no public notice required

How many notices do i send? 

• Schedule 1 - Max three
• Schedule 2 – Two
• Schedule 3 – One
• Schedule 4 Part 1 – Two
• Schedule 4 Part 2 – Max three

What are the notices? And how long do I need to allow for responses? 

• Notice of Intention - allow 32 days
• Notice of Proposals - allow 32 days
• Notice of Reasons - to be sent 21 days after the decision (only required under Schedule 1 and Schedule 4, Part 2) and then only if the chosen supplier is not the lowest tenderer, or is not the firm nominated

What should the Notice of Intention state?

• Description of the work / services (stated in general terms but sufficient detail to be clear what is covered), and/or where the specification can be viewed
• Reason for the agreement (to set out clearly why the agreement is needed)
• Invite observations (and summary of previous observations / responses where this has happened)
• State where observations are to be sent and when the period ends for observations
• Ask for nominations if appropriate for the type of consultation being followed – Schedule 1 or Schedule 4: Part 2

How should the costs be presented?

There is a preferred hierarchy within the Service Charges Regulations, Schedule 1 outlines this as follows:

• Cost per tenant (preferred), or
• Cost per block / estate where the above is not possible, or
• Principles for working out the cost, e.g., hourly rates, Schedule of Rates
• How any variation to the amount is to be determined
• The duration of the agreement

How long is the "relevant period" that the notice needs to set out for?

30 days - but allow for posting time, which is normally two days for first class post

What does the "date of the notice" mean?

This has been defined in case law as the date given to the recipient - so allow 32 days for the notice period from when it is sent. 

Can I use a framework and comply with Section 20? 

Yes, if the contract value is under the level where public notice is required. SEC provide advice on this here: Section-20-Advice.pdf (southeastconsortium.org.uk).

If the contract value is above the level where public notice is required, there is a risk that the procurement may fail if nominations are received. In this case, take specific advice. Again, we can assist with this. 

What value do I use if I include extension provisions?

The value is the total value, with all extension provisions included. For example, if the contract is for 5 years with a 4-year extension in two 2-year provisions, then the value relates to nine years, to include both the extensions. 

What are the public notice thresholds?

These change every two years. The current levels, set at 1 January 2022, are:

• Supplies and services - £213,447
• Works - £5,336,937

Figures include VAT.

If I get more than one nomination, do I have to accept them all?

No, if tenants nominate more than one supplier you only have to accept one, which will normally be the one with the most votes. Nominated suppliers still have to be able to pass the clients’ vetting procedures and be able to manage the whole contract. If a recognised tenants’ association nominates a supplier, as well as tenants, then quotes need to be obtained from both.

What about dispensation?

This can be done, by application to the First-tier Tribunal. 

What do I do if I find that responsive works are required that cost over £250/flat?

If the contract has been consulted on as a QLTA you will need to complete consultation under Schedule 3 of the Service Charge Regulations. This is a single notice that must relate to the works required.