WHAT IS A SECTION 20 CONSULTATION AND WHY DOES IT AFFECT ME?
The Section 20 consultation process was put in place to protect service charge payers and to make sure that landlords only carry out work or enter into service contracts that are necessary and at a reasonable cost.
Anyone who pays a service charge whether they are a leaseholder, shared owner or tenant maybe be affected by a section 20 consultation.
The process allows service charge payers the chance to comment on our plans and sometimes to suggest contractors for the works/service depending on the value of the contract.
WHEN IS THE SECTION 20 CONSULTATION PROCESS USED?
For any one-off works that will cost an individual service charge payer over £250 or for any new service (for example ground maintenance) that lasts longer than 12 months and will cost any service charge payer over £100, we need to let you know and give you the chance to comment on what we are planning.
Your comments (known as observations) form part of a formal consultation between us and you and it’s our legal requirement under section 20 of the Landlord and Tenant Act 1985 to involve you.
HOW DOES THE SECTION 20 CONSULTATION PROCESS WORK?
This may vary according to the type of work/service and the cost but it’s usually along these lines:
- We send you a legal Notice telling you what work or type of contract we are planning to enter into. This will include letting you know where you can find out more details and how you can provide your comments and nominate contractors (if applicable)
- We get some quotes from contractors, taking in to account any comments we’ve received
- We send you a ‘notice of estimates’ which gives you the details of the estimated costs. You are also able to provide feedback to us on the estimates
- Taking into account any feedback we received we award the contract to a preferred supplier to carry out the work or provide the service
- If the contractor is not the cheapest or one that has been nominated, we will write to explain why they have been awarded the contract
CAN I SUGGEST A CONTRACTOR?
Yes at stage 1 of the consultation, apart from in the circumstances set out in the below question. Any persons nominated will need to meet the minimum standards required of all bidders, for example, relevant insurances and health and safety compliance.
Employers Liability: Minimum of £10 million
Public Liability: Minimum of £5 million
Product Liability Minimum of £5 million
Contractors All Risks Minimum of £1 million
Professional Indemnity Minimum of £2 million
IS THERE ANY TIME WHEN I CAN’T SUGGEST A CONTRACTOR?
Yes. If the value is over £4.5millon for works and £181,302.00 for supplies and service contracts it has to be advertised in the European Journal. This means that the tender process is significantly larger and as such we are not able to take into account contractors that are suggested as part of a section 20 consultation. These are the consultations under Schedule 2 and Schedule 4 Part 1 of the Service Charges (Consultation Requirements) (England) Regulations 2003.
WHAT IS AN OBSERVATION?
You have a right to reply with your comments to a Section 20 notice up to 30 calendar days from the date of the notice. Your reply is known as an ‘observation’. We will give due regard to any observations received during the consultation period.
A summary of all the observations received and our responses to them will be sent out with the next stage of the consultation documents.
All the comments and feedback we receive are taken into account when planning the work and awarding the contract.
HOW DO I MAKE AN OBSERVATION?
Your observation must be in writing either by letter or email. Any email should be sent to firstname.lastname@example.org. Letters should be sent to the following address, Section 20 Officer, Aster Group, Sarsen Court, Horton Avenue, Cannings Hill, Devizes, Wiltshire, SN10 2AZ. You can’t make observations verbally over the telephone or in person.
When would I find out how much the works/service contract would cost me?
At Stage 2 of the Section 20 Consultation (Notice of Estimates) we will provide detailed estimates from contractors and a breakdown of costs.
WHAT IS AN ESTIMATE?
Before going out to tender we carry out extensive inspections to produce a specification for any works that need to be carried out. During the tender process suppliers will provide an estimated cost based on this specification and using current market prices. This is the estimated figure that we will send you as part of the S20 consultation. When the work is completed the contractor provides the actual costs and this is the amount leaseholders will be required to pay a proportion of. Actual costs can vary from estimated costs. If you have started paying the estimated costs through your service charge any difference between these and the actual costs will be dealt with at the end of the financial year.
WHAT IS A SINKING FUND/RESERVE FUND?
Each year some home owners pay into a reserve or sinking fund. This fund is money that is set aside, year by year, to pay for longer term maintenance and works. The amount collected may not always cover the full costs of the works and you may be required to pay a top up, you will be told if this is the case. If you have been contributing to a sinking fund towards the cost of future works we will check the balance available and possibly use this to offset costs.
If your lease does not include this provision or you are not paying into a sinking/reserve fund you may be required to pay your share of any works in full. We strongly advise for you to plan and make provision for any future works costs.
IS THIS Section 20 NOTICE A BILL?
No, this is not a bill. You don’t need to make any payment in response to receiving this letter or any enclosed notices.
When will I be billed?
This will be dependent on the form of your Lease or Tenancy Agreement, however typically we will have added an estimated cost for the works to your service charge account at the beginning of the financial year in which the works are proposed to be undertaken. When the work is finished, and we know the final costs any adjustments for under or over payment will be part of your annual service charge reconciliation and statement, which is typically carried out in the September following the final costs being available.
Will my service charge increase?
Your service charge will depend on the services and works which take place in the building/estate that you live in. We will not be asking you to pay for anything for which you are not receiving or will not receive a service for in the future.
What if I cannot afford to pay?
If you are worried about how you will meet the cost please speak to your housing officer. For more information visit https://www.aster.co.uk/existing-customers/leaseholder/what-to-do-if-you-are-struggling-to-pay
I have received a S20 notice but I don’t think it’s for me
If you receive a notice to your address but not in your name please let us know, it may be that our records need updating or that the leaseholder is subletting the property to you.
If you are a leaseholder sub-letting your property please let us have a correspondence address so we can send S20 Notices to you there.
I am planning to sell my property before the service described in the S20 notice is completed
You should keep the documents safe and pass them to your solicitor when you have accepted an offer. Any potential purchaser needs to be aware of any Section 20 consultation.
Where can I go for advice?
You can contact your local Citizens Advice Bureau for independent advice. The following websites also have useful information about the S20 process: