It is critical as a property manager or letting agent that you seek to maintain your property for its residents. Whether they are exciting renovations, critical repairs, or simply weekly upkeep these actions should help to ensure a safe and successful property let.
However, with improvements comes the requirement for compliance. Section 20 (S20) of the Landlord and Tenant Act 1985 (applicable to landlords/freeholders, right to manage companies, resident management companies, and their managing agents in England and Wales) states that landlords or their agents must participate in set consultation procedures with leaseholders before carrying out work on property worth more than a certain amount.
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Failure to comply with this regulation can result in costly penalties and disgruntled residents, ultimately hurting your company’s reputation. Knowledge of S20 and following consultation processes will help maintain the success of your property and the satisfaction of your inhabitants.
What is Section 20?
S20 is intended to shield leaseholders from having to spend substantial sums of money for repairs to their building. It basically specifies that a property’s landlord or rental agent must follow particular consultation procedures before beginning work that would need any single leaseholder to invest an estimated £250 or more. This figure must include VAT and consultancy fees.
If the landlord or renting agent fails to follow these consultation processes to notify leaseholders prior to the start of work, the leaseholders’ share to the cost of work will be limited. This means that the landlord or rental agent can only collect £250 from each leaseholder for the final bill, regardless of the overall cost of the renovation. Noncompliance can also lead to lost wages and negligence lawsuits.
Maintain the success of your property by ensuring that Section 20 is understood and that relevant processes are followed.
Section 20 Consultation Procedures
S20 requires three primary consultation procedures. They are as follows:
Stage One: Notice of Intention
You must first serve a notice to the leaseholder(s) outlining the proposed works and why they are required for the property. Commentary and contractor nominations should be welcomed in response to this notice. Leaseholders must be given 30 days to respond.
Stage Two: Estimate Statement
As soon as you get estimates, you must notify all leaseholders about the expenses. This announcement should also invite feedback and allow leaseholders 30 days to react.
Stage Three: Notice of Reasons
Once the contract for the works has been awarded, you must deliver a final notice if you did not select the lowest-priced estimate or contractor nominee. You must provide justification for the option you selected.
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