Making sure we consult leaseholders correctly
Before we carry out any large-scale, expensive works on your building we’re legally required to consult you.
This relates to certain works that we use your service charge to pay that aren’t part of the usual day-to-day running costs of your building.
As a leaseholder, you pay a service charge towards the cost of services or work we carry out on the building your home is in or the estate it’s on. Under section 20 of the Landlord and Tenant Act 1985 (amended by section 151 of the Commonhold and Leasehold Reform Act 2002), we must consult you about the work or services we provide in certain circumstances.
When must leaseholders be consulted?
- If we carry out one-off work which will cost any one leaseholder more than £250. This could be for things like repairs, redecoration or cyclical works – please see more information below on sinking funds).
- If we enter into a long-term agreement (for more than 12 months) with outside contractors for work, supplies or services which will cost any one leaseholder more than £100 a year. This could be for things like lift servicing, grounds maintenance or building insurance.
What about money I’ve paid into the sinking fund?
Sinking funds act as a savings account to pay for large expenses that aren’t part of the usual day-to-day costs. If your block has a sinking fund, it will often be used to cover the cost of cyclical works. If the sinking fund is more than the cost of the work, we won't ask you to pay any more, but we’ll send you a final account so that you know exactly how much of the fund is being used. We’ll only invoice leaseholders if the amount in the sinking fund isn't sufficient to cover the costs.
How does the process work?
By law, leaseholders have to be given the opportunity to comment on any proposed work and related costs. There are usually three stages which take place at 30-day intervals:
- Stage 1: We’ll write to you with an overview of the service or work we’re considering. You must reply within 30 days with any comments. In some cases, you can nominate a contractor.
- Stage 2: We’ll write to you again and provide details of the quotes we’ve received from the tendering process. This allows us to estimate how much the contract is likely to cost you. You then have a further 30 days to give your feedback.
- Stage 3: If we didn’t go with the lowest quote or a contractor nominated by a resident, we’ll write again to explain why we made our choice. At this stage, we can begin the work and costs will be included in your subsequent service charges.
What if I don’t want the work to be carried out?
Section 20 notices are issued for work to communal areas. This means that as per the terms of your lease, all leaseholders have to contribute and can’t be excluded.
Can I nominate a contactor?
You can nominate or suggest a contractor to carry out work that we don’t need to give public notice for. We have to give public notice when the likely cost of a contract is above a certain value (usually over £118,000). In those instances, we have to advertise on the Government's Find a Tender website.
Can work start before the consultation is finished?
We won’t award a contract or start any work until the consultation has finished.
What happens if you don’t consult me?
If we don’t consult you over any qualifying works, the amount we can charge is capped at £250 for one-off works. For long-term contracts we can’t charge more than £100.
There are situations where we might not be able to consult you – mainly where emergency work needs to be carried out immediately. In those instances, we can apply to the First-Tier Tribunal (Property Chamber) to start the work without consultation. But we would still need to comply with any conditions the tribunal might impose.
How do you work out my contribution?
How we calculate your contribution is set out in the terms of your lease. The most common way is to divide the cost by the number of homes in a building. It might also be based on rateable value, floor area or percentage split.