What Section 20 Requires
Section 20 of the Landlord and Tenant Act 1985 (as amended by the Commonhold and Leasehold Reform Act 2002) requires landlords and management companies to consult leaseholders before carrying out 'qualifying works' that will cost any individual leaseholder more than £250, or entering into 'qualifying long-term agreements' (contracts lasting more than 12 months) where any leaseholder's contribution exceeds £100 per year.
The consultation process is prescribed by law and involves three stages. First, the landlord must send a 'notice of intention' describing the proposed works, the reasons for them, and inviting observations within 30 days. Second, the landlord must obtain at least two estimates (one from a contractor nominated by the leaseholders if they wish) and send a 'notice of proposals' with the estimates, again inviting observations within 30 days. Third, the landlord must consider all observations and notify leaseholders of the chosen contractor and reasons.
If the landlord fails to follow the Section 20 consultation process, they can only recover £250 per leaseholder for the works — regardless of the actual cost. This is a powerful protection: a £50,000 roof repair that should have been consulted on but wasn't can only be charged at £250 per leaseholder. The landlord can apply to the First-tier Tribunal for dispensation from the consultation requirements, but must demonstrate good reason.
The £250 Threshold and Qualifying Works
The £250 per-leaseholder threshold for qualifying works is based on the individual leaseholder's contribution, not the total cost of the works. So if a building has 10 flats with equal service charge proportions, works costing more than £2,500 in total would trigger Section 20 requirements (£2,500 ÷ 10 = £250 per leaseholder).
Qualifying works include major repairs (roof replacement, external redecoration, lift refurbishment, window replacement), improvements (adding new security systems, communal area upgrades), and any other work to the building or estate that exceeds the threshold. Regular maintenance and day-to-day repairs are not qualifying works — they're covered by the standard service charge provisions.
Landlords sometimes try to avoid Section 20 by splitting works into smaller packages that each fall below the threshold, or by claiming the works are 'urgent' and require immediate action without consultation. Both approaches are challengeable. The First-tier Tribunal takes a dim view of deliberate threshold avoidance, and genuine emergencies (burst pipes, dangerous structures) are rare — the tribunal will assess whether the urgency was genuine.
| Threshold | Applies to | Consultation required? |
|---|---|---|
| Over £250 per leaseholder | Qualifying works (one-off) | Yes — full three-stage process |
| Over £100/year per leaseholder | Qualifying long-term agreements | Yes — similar three-stage process |
| Under £250 per leaseholder | Minor works and repairs | No — but charges must still be reasonable |
| Emergency works | Genuinely urgent repairs | Dispensation can be sought from tribunal after the fact |
Challenging Unreasonable Service Charges
Under Section 19 of the Landlord and Tenant Act 1985, service charges are only payable to the extent that they are 'reasonably incurred' and the works or services are of a 'reasonable standard'. This gives leaseholders the right to challenge any charge they consider excessive, unnecessary, or poorly executed — regardless of what the lease says.
The First-tier Tribunal (Property Chamber) is the forum for challenging service charges. You do not need a solicitor to apply — the tribunal is designed to be accessible to unrepresented leaseholders. The application fee is modest (£100–£300 depending on the value in dispute) and the tribunal has the power to determine whether specific charges are reasonable, order reductions, and award costs in limited circumstances.
Common grounds for challenge include: overcharging for routine maintenance (comparing quotes from independent contractors), poor-quality workmanship (paying premium prices for substandard work), unnecessary works (full replacement when repair would suffice), opaque accounting (inability to provide receipts, invoices, and breakdown of costs), and insurance commissions (management companies receiving undisclosed kickbacks from building insurance providers).
- ▸Request a summary of costs: Under Section 21 of the 1985 Act, you have the right to request a written summary of service charge costs. The landlord must provide this within 21 days or face a fine.
- ▸Inspect receipts and invoices: Under Section 22, you can inspect (and take copies of) all invoices, receipts, and other documents supporting the service charge within 6 months of receiving the summary.
- ▸Apply to the First-tier Tribunal: Under Section 27A, you can apply to the tribunal to determine whether service charges are payable and reasonable. The tribunal can review past and future charges.
- ▸Withholding payment: You can withhold payment of disputed charges while the tribunal considers your application — but only the disputed element. Continue paying undisputed charges to avoid giving the landlord grounds for forfeiture proceedings.
Right to Manage
If you're consistently unhappy with how your building is managed, leaseholders have the 'Right to Manage' (RTM) under the Commonhold and Leasehold Reform Act 2002. This allows leaseholders to take over management of the building from the landlord or their appointed management company — without needing to prove mismanagement and without buying the freehold.
To exercise RTM, leaseholders must form an RTM company (a no-fault company limited by guarantee) with at least 50% of the flats as members. The RTM company then serves notice on the landlord, and — provided the qualifying criteria are met — acquires management responsibilities after a set period. The landlord can challenge the claim in the tribunal, but the grounds for challenge are narrow.
RTM gives leaseholders control over service charge budgets, contractor selection, maintenance schedules, and building insurance. The RTM company becomes responsible for management — which means leaseholders must either self-manage or appoint a managing agent of their choice. This is a significant responsibility, and buildings with active, engaged RTM companies tend to have lower service charges and better maintenance outcomes than those where RTM is exercised but not actively managed.
Buying Before You Check: Due Diligence on Service Charges
Before buying a leasehold flat, always request at least 3 years of service charge accounts, the current year's budget, and details of any planned or anticipated major works. Your solicitor should raise these as standard enquiries, but many buyers don't review the responses carefully enough.
Look for year-on-year increases significantly above inflation, large 'reserve fund' or 'sinking fund' contributions without a clear plan for their use, management fees that seem high for the level of service provided, and building insurance premiums that are significantly above market rates (this often indicates commissions being taken by the management company).
For new build flats specifically, be aware that developers often set artificially low service charges in the first 1–2 years to make the development more attractive to buyers. Once the developer's management company is in place (or once a third-party manager takes over), charges can increase substantially. Ask the developer for projected service charges over 5 years, not just the first year's estimate.
Key Takeaways
- ✓Section 20 requires landlords to consult leaseholders on works costing more than £250 per leaseholder — failure to consult caps recovery at £250
- ✓You have a legal right to request service charge summaries (Section 21) and inspect all supporting invoices and receipts (Section 22)
- ✓The First-tier Tribunal can determine whether charges are reasonable — applications cost £100–£300 and you don't need a solicitor
- ✓Right to Manage allows leaseholders to take over building management without proving fault — but requires 50% participation
- ✓Before buying, request 3 years of service charge accounts and ask about planned major works — unexpectedly large bills are the most common leasehold complaint
- ✓New build service charges are often artificially low in year one — ask the developer for 5-year projections