Section 20: What happens when the S20 procedure isn’t followed?
Sinead Campbell from London Flats Insurance discusses what happens when landlords don’t correctly follow the three-step Section 20 consultation procedure.
Section 20 is a legal requirement which landlords must follow for the sake of their tenants. Failure to adhere to the requirements of the Section 20 consultation procedure will almost always result in a legal dispute, and rightly so. When tenants are expected to pay expensive fees for major works, it is essential that they are kept in the loop and able to put forward their own opinions on contactors and costs.
The process
The Section 20 consultation process is a three-step procedure which ensures any major works are carried out in the most efficient and cost-effective way. These steps include:
- The Notice of Intention: This details the work which needs to be done to the property, the reason for completing the works, and a list of approved contractors suggested to carry out the work. Leaseholders can write back with their own suggestions for contractors, which will usually be considered within 30 days.
- The Notice of Estimates: This is the second notice which provides leaseholders with a list of all possible contractors, with the two cheapest estimated contractors highlighted.
- The Notice of Award of Contract: This is a notice handed out to tenants detailing who is going to be carrying out the works. If the landlord chooses the cheapest contractor, they can normally let out the contract immediately. However, if they choose a different contractor, they must send an explanation to the tenants within 21 days.
So, what happens when landlords don’t correctly follow the consultation process?
Take, for example, the Ashleigh Court v De-Nuccio & Ors case from 2015.
In this case, the Right to Manage (RTM) company had initially adhered to S20 requirements and provided both the Notice of Intention and the Notice of Estimates. However, tenants must be given a fair opportunity to look at the proposed estimates. In this case, the RTM company had not provided a reasonable time and place for tenant to do so.
Firstly, they only allowed leaseholders to inspect the estimates between 9am-12pm on weekdays, and further requested that tenants were to give 48 hours’ prior notice before. On top of this, the RTM company did not provide tenants with sufficient contact details nor give out their registered address, meaning leaseholders were unable to properly access any of the relevant documentation.
When reviewing the case, The First Tier Tribunal ruled that the RTM company had failed to properly uphold the requirements of the S20 consultation. This decision was upheld by the Upper Tribunal, and thus rendered the RTM company only able to recover a maximum of £250 per leaseholder.
The FTT ruled against the RTM company on the basis that they had failed to provide clear contact details and offer a ‘reasonable’ time for estimates inspection. Initially, the FFT had stated the time and place the RTM made available for inspections was not “sufficiently adequate”. However, according to the Royal institute of Chartered Surveyors, it was deemed that “the question which should have been asked pursuant to the regulations was whether the time and place specified for inspection were reasonable” as opposed to “sufficiently adequate”.
This poses the somewhat abstract question as to what can be considered ‘reasonable’ in terms of the time and place that needs to be made available for tenants to access documents. Should inspections be offered within the standard 9am-5pm working hours? In the evenings? Mornings? Or should there be no restrictions imposed at all, instead allowing tenants to access documents at any time? Logically, a ‘reasonable’ course of action would be to avoid the mistakes of the RTM company, i.e. having no 48-hour notice restriction prior to inspection, supplying clear contact details, and providing a clear address.
Imposing a ‘reasonable’ time and place for document access is where it gets slightly trickier. Realistically, there is no specific answer. It is impossible for one piece of legislation to dictate a specific time and place for every block of flats undergoing major works – this must be the responsibility of the landlord or managing company. And whilst having 48 hours’ notice prior to inspection is an unnecessary requirement, it remains to be said that there is no set algorithm to which RTM companies or landlords can refer when deciding what availability is ‘reasonable’.
Realistically, a retirement block of flats and a block with mostly working families will have different interpretations of what constitutes a ‘reasonable’ time and place to access relevant documentation. Likewise, it is difficult to determine the most ‘reasonable’ availability for tenants who are away from the property for lengthy periods of time for travel or work.
In short, a ‘reasonable’ time and place to access documentation must be determined by a variety of factors; for example, the most accommodating time slot available; the address given to the tenants; the documents to be inspected; and, the availability of the tenants themselves. As such, this decision is entirely subjective. And, whilst ‘reasonableness’ is difficult to address under one piece of legislation; it remains to be said that any actions deemed as ‘unreasonable’ will be legally addressed. As shown by the Ashleigh Court v De-Nuccio & Ors case, Section 20 consultation procedures should be taken very seriously – to a reasonable standard, of course.