Section 20 Notices: What Sellers Need to Know

If you are selling a leasehold flat and your building has major works planned, in progress, or recently completed, the Section 20 consultation process will almost certainly come up during the sale. Buyers and their solicitors will want to know what works are happening, how much they will cost, and — most importantly — who is expected to pay.

This guide explains what Section 20 requires, how the consultation process works, and how to handle the practical issues that arise when you sell a flat with major works on the horizon.

What is Section 20 of the Landlord and Tenant Act 1985?

Section 20 of the Landlord and Tenant Act 1985 (as substituted by Section 151 of the Commonhold and Leasehold Reform Act 2002) requires landlords to consult leaseholders before carrying out qualifying works or entering into qualifying long-term agreements above a certain cost threshold.

The consultation requirement exists to protect leaseholders from being presented with large, unexpected service charge bills for work they had no input into. It gives leaseholders the opportunity to comment on proposed works, suggest alternative contractors, and challenge costs they consider unreasonable.

In the context of selling a leasehold flat, Section 20 matters because any ongoing or planned major works will be scrutinised by the buyer's solicitor and mortgage lender. The way costs are apportioned between seller and buyer is one of the most common areas of negotiation in leasehold sales involving major works.

What are qualifying works?

Qualifying works are works on a building (or any premises) where any leaseholder's contribution through the service charge will exceed £250. The threshold is per leaseholder, not per building. Common examples include:

• Roof replacement or major repairs
• Exterior redecoration and rendering
• Lift installation, replacement, or overhaul
• Window and door replacement across the building
• Structural repairs to foundations or load-bearing walls
• Cladding remediation or fire safety works
• Drainage and plumbing overhauls
• Major landscaping or car park resurfacing

The £250 threshold has not changed since it was set by theService Charges (Consultation Requirements) (England) Regulations 2003. With construction costs having risen considerably since then, most building-wide works now exceed this limit and trigger the consultation process.

There is also a separate threshold for qualifying long-term agreements (contracts lasting more than 12 months, such as maintenance or cleaning contracts) where the cost exceeds £100 per leaseholder per year.

The three-stage consultation process

The Section 20 consultation follows a prescribed three-stage process set out in the Service Charges (Consultation Requirements) (England) Regulations 2003. Each stage has specific requirements that the landlord must follow.

Stage 1: Notice of intention

The landlord serves a written notice on each leaseholder (and any recognised tenants' association) describing the proposed works in general terms. The notice must:

• Describe the works to be carried out and the reasons for them
• Invite leaseholders to make written observations within a period of not less than 30 days
• Invite leaseholders to nominate contractors from whom the landlord should seek estimates
• State the address to which observations and nominations should be sent

This first notice does not include specific costs. It is about informing leaseholders that works are being considered and giving them an opportunity to influence the process.

Stage 2: Statement of estimates

After the consultation period closes, the landlord obtains estimates for the works. The landlord must obtain at least two estimates, and if any leaseholder nominated a contractor at Stage 1, the landlord must seek an estimate from that contractor too. The landlord then serves a second notice:

• Setting out at least two of the estimates received (including any from a nominated contractor)
• Summarising any observations received from leaseholders at Stage 1, and the landlord's response to them
• Inviting further written observations within not less than 30 days

At this stage, leaseholders can see what the works are likely to cost and comment on the proposed contractor and approach.

Stage 3: Notification of award

Once the second consultation period ends, the landlord considers the observations and selects a contractor. If the landlord does not choose the cheapest estimate, they must write to each leaseholder within 21 days explaining why. The landlord must also have regard to any observations received at Stage 2.

The entire process from the first notice to the start of works typically takes three to six months, though more complex or contentious projects can take considerably longer.

The £250 cap: what happens if consultation is not followed

If the landlord carries out qualifying works without properly following the Section 20 consultation process, the maximum amount recoverable from each leaseholder through the service charge is capped at £250. This is a significant penalty for the landlord and a powerful protection for leaseholders.

For example, if a roof replacement costs £5,000 per flat but the landlord skipped the consultation or made procedural errors, each leaseholder's liability is limited to £250 regardless of the actual cost. The landlord bears the shortfall.

The landlord can apply to the First-tier Tribunal (Property Chamber) for dispensation from the consultation requirements. The tribunal will grant dispensation if it is satisfied that the leaseholders would not be significantly prejudiced by the failure to consult. Common reasons for seeking dispensation include genuine emergencies (such as a burst pipe or dangerous structural defect) or situations where the landlord made a minor procedural error during consultation.

As a seller, the £250 cap is relevant because the buyer's solicitor will check whether any major works were properly consulted. If they were not, the buyer may argue that the costs are unenforceable and use this as a negotiating point.

Selling during ongoing major works

Selling a flat while Section 20 works are in progress is perfectly possible, but you need to be prepared for additional scrutiny and potentially a longer negotiation. The buyer's solicitor will raise detailed enquiries about the works, including:

• What stage the consultation process has reached
• The estimated total cost and the cost per leaseholder
• Whether the works have started and when they are expected to finish
• How the costs will be funded (reserve fund, special levy, or loan)
• Whether any leaseholders have raised objections or tribunal applications

If the works involve scaffolding, noise, restricted access, or significant disruption, this may also affect viewings and buyer interest. Estate agents experienced in leasehold sales can help manage the messaging around this.

Who pays: seller or buyer?

The question of who is liable for Section 20 major works costs when a flat changes hands is one of the most common issues in leasehold conveyancing. The answer depends on three factors:

1. The completion date

As a general principle, the seller is responsible for service charge obligations that fall due before the date of completion, and the buyer takes on obligations that fall due after completion. On the day of completion, service charges are typically apportioned between the parties — the seller pays their share up to completion and the buyer pays from completion onwards.

2. When the demand is issued

If a service charge demand for major works has already been issued to the seller before completion, the seller is usually liable to pay it. If the demand is issued after completion, the buyer becomes liable. Some works are invoiced in stages over several years, which can mean costs are split across both parties depending on when demands fall.

3. The terms of the lease

Individual leases vary in how they deal with the apportionment of service charges on sale. Some leases contain specific provisions about major works costs and how they are allocated when the flat is sold during a works programme. The buyer's solicitor will review the lease carefully on this point. Your solicitor should check the relevant provisions and advise you before you agree to any apportionment in the completion statement.

In practice, this area is often negotiated between the parties. If works are imminent but no demand has been issued, the buyer may ask for a price reduction or a retention from the sale proceeds to cover their anticipated costs. If the demand has been issued to the seller, the seller's solicitor will typically arrange for it to be settled from the sale proceeds on completion.

How the LPE1 discloses planned works

The LPE1 (Leasehold Property Enquiries) form is the primary document through which the buyer's solicitor discovers information about Section 20 works. The managing agent or freeholder completing the form must disclose:

• Whether any Section 20 notices have been served for current or upcoming works
• The estimated cost per leaseholder for any planned works
• Whether any major works are anticipated in the next three to five years
• Details of any reserve fund or sinking fund balances that may offset costs
• Whether any leaseholders have challenged or are challenging the costs at tribunal

The LPE1 forms the core of the leasehold management pack. Ordering it early gives you the chance to review what it says about major works and prepare your responses before the buyer's solicitor raises enquiries. If the LPE1 reveals large upcoming costs, you can address them proactively — either by adjusting your asking price, providing additional context, or preparing documentation that shows the works have been properly consulted and are necessary.

Handling buyer concerns about large upcoming bills

A Section 20 notice or the prospect of significant major works can alarm buyers, particularly first-time buyers who may not be familiar with how leasehold service charges work. Here are practical ways to manage this:

Be transparent from the outset

If you know that major works are planned or in progress, it is better to disclose this early rather than wait for it to emerge during conveyancing. The Property Ombudsman's code of practice expects material information to be disclosed to potential buyers. Concealing known major works costs will almost certainly come to light when the management pack is reviewed, and the resulting loss of trust can collapse the sale entirely.

Price the property realistically

If a £10,000 per flat levy is on the horizon, pricing the flat as though it does not exist will lead to renegotiation or withdrawal once the buyer's solicitor discovers the costs. Consider factoring the anticipated cost into your asking price from the start, or be prepared to negotiate when the issue arises.

Provide context and documentation

Major works are not inherently negative — a building that has recently had its roof replaced, windows upgraded, or exterior redecorated is in better condition than one that has deferred maintenance for years. Frame the works positively where appropriate: provide copies of the Section 20 notices, the estimates, and any reports that explain why the works are necessary. A well-maintained building with a healthy reserve fund is an asset, not a liability.

Offer practical solutions

Where costs are known but not yet demanded, you might offer to contribute a fixed sum towards the works as part of the transaction, or agree that a specified amount is retained from the sale proceeds by the seller's solicitor until the demand is issued. These arrangements give the buyer confidence that they will not be left solely responsible for costs that relate to your period of ownership.

Section 20 and service charge arrears

If you have outstanding service charge arrears, including unpaid contributions towards Section 20 works, these will be flagged on the LPE1 form and will need to be cleared before or at completion. Arrears create a significant problem in leasehold sales because:

• The buyer's solicitor will not allow their client to complete until arrears are settled, as outstanding charges can be a ground for forfeiture of the lease
• Mortgage lenders will not lend on a property with unresolved service charge disputes or significant arrears
• Arrears on your account may indicate wider financial issues with the building that concern the buyer

Your solicitor will usually arrange for any arrears to be paid from the sale proceeds on completion, with the amount being deducted from the net proceeds before the balance is released to you.

Practical steps for sellers

If you are selling a leasehold flat and Section 20 works are relevant, here is a practical checklist:

1. Check with your managing agent. Ask whether any Section 20 consultation is in progress, planned, or anticipated in the next three to five years. Get this information before you list the property.
2. Order the management pack early. The LPE1 will disclose all relevant major works information. Having it in advance means no surprises during conveyancing.
3. Review the Section 20 notices. If notices have been served, check that the consultation process has been followed correctly. Any procedural failings could affect the enforceability of the charges.
4. Gather supporting documents. Collect copies of all Section 20 notices, estimates, reports, and any correspondence from the managing agent about the works.
5. Take legal advice on apportionment. Ask your solicitor to review your lease and advise on how major works costs will be split between you and the buyer.
6. Discuss pricing with your estate agent. If significant works are upcoming, your agent should factor this into the pricing strategy and be prepared to explain the position to buyers.
7. Be proactive with buyers. If a buyer raises concerns, respond promptly with clear, factual information. Delays in responding to enquiries about major works are a common cause of sales falling through.
8. Clear any arrears. Settle outstanding service charge payments before listing if possible, or ensure your solicitor will handle them from the sale proceeds.

Section 20B: the 18-month time limit

Section 20B of the Landlord and Tenant Act 1985 is a separate but related provision that is worth understanding as a seller. It requires the landlord to either demand payment of service charges within 18 months of incurring the costs or to notify the leaseholder in writing within that period that the costs have been incurred and a demand will follow.

If the landlord fails to comply with Section 20B, the leaseholder is not liable for the costs. This is relevant when selling because the buyer's solicitor may check whether any historic costs are time-barred under Section 20B. If works were completed more than 18 months ago and no demand or notification was issued, the costs may no longer be recoverable from the leaseholder.

Dispensation from the consultation requirements

In some circumstances, the landlord may apply to the First-tier Tribunal for dispensation from all or part of the Section 20 consultation process. The tribunal will grant dispensation if it considers that the leaseholders will not be significantly prejudiced by the failure to consult. Common scenarios include:

• Emergency repairs where delay would cause further damage or health and safety risks (e.g. a failing roof during winter, burst mains, dangerous structural defects)
• Procedural errors where the landlord followed the spirit of the consultation but made a minor technical mistake in one of the notices
• Insurance-funded works where the insurance company dictates the contractor and timetable, leaving no practical scope for the normal consultation process

As a seller, if the LPE1 discloses that dispensation has been granted for past works, you should ensure the tribunal order is included in the sale pack. The buyer's solicitor will want to see it as confirmation that the costs are properly recoverable through the service charge.

Sources

• Landlord and Tenant Act 1985, Section 20 — legislation.gov.uk
• Commonhold and Leasehold Reform Act 2002, Section 151 — legislation.gov.uk
• Service Charges (Consultation Requirements) (England) Regulations 2003 (SI 2003/1987) — legislation.gov.uk
• Landlord and Tenant Act 1985, Section 20B — legislation.gov.uk
• LEASE (Leasehold Advisory Service / Leasehold Knowledge Partnership) — lease-advice.org
• First-tier Tribunal (Property Chamber) — gov.uk/courts-tribunals/first-tier-tribunal-property-chamber
• Law Society — Leasehold Property Enquiries (LPE1), 2nd edition — lawsociety.org.uk
• RICS Service Charge Residential Management Code, 3rd edition — rics.org
• The Property Ombudsman Code of Practice for Residential Estate Agents — tpos.co.uk
• Daejan Investments Ltd v Benson [2013] UKSC 14 (Supreme Court guidance on dispensation) — supremecourt.uk

Frequently asked questions