Section 20 is a legal requirement under the Landlord and Tenant Act 1985, as amended by the Commonhold and Leasehold Reform Act 2002. It requires any landlord, RTM company, or Residents Management Company (RMC) to formally consult leaseholders before spending significant amounts of their service charge on major works or long-term contracts.
The purpose is straightforward: leaseholders are paying the bill, so they have a statutory right to be consulted before commitments are made on their behalf.
As an RTM director, you step into the landlord's shoes for management purposes. That means Section 20 applies to you, regardless of whether everyone in the building is a member of your RTM company and regardless of how much leaseholders trust you.
There are two situations that trigger the Section 20 process:
Qualifying works: any works where a single leaseholder would be charged more than £250. This is the threshold per leaseholder per accounting period, not the total contract value. A £5,000 roof repair shared across 10 leaseholders works out at £500 each, well over the threshold, and Section 20 applies.
Qualifying long-term agreements: any contract lasting more than 12 months where a single leaseholder would pay more than £100 per year. This catches long-term maintenance contracts, cleaning contracts, lift servicing agreements, and similar arrangements.
Both thresholds are lower than most RTM directors expect. If in doubt, assume Section 20 applies and consult accordingly. The cost of running the process is always less than the cost of getting it wrong.
This is where RTM directors come unstuck. Failing to follow the Section 20 process properly has one primary consequence: your ability to recover costs from leaseholders is capped at £250 per leaseholder, regardless of what the works actually cost.
If your roof replacement costs £45,000 across 10 leaseholders (£4,500 each), but you failed to consult correctly, you can only recover £250 per leaseholder, a total of £2,500 against a £45,000 bill. The remaining £42,500 does not disappear. It becomes a problem for your RTM company, and potentially for you personally as a director.
Courts and tribunals have not traditionally been lenient about procedural failures. As one Property Institute advice note puts it, the question is not whether you tried, it is whether you complied.
There is one route around this: applying to the First-tier Tribunal for dispensation from the consultation requirements. This is available in genuine emergencies: structural collapse, serious water ingress, immediate safety risks. But dispensation is not guaranteed, and it should never be your plan A.
Section 20 consultation for qualifying works involves three formal stages. Each stage involves a notice, a waiting period, and specific content requirements. Miss any stage or get the timing wrong and the consultation can be challenged.
Stage 1 - Notice of Intention
You must serve a Notice of Intention on every leaseholder who would be required to contribute to the cost, and on any Recognised Tenants' Association (RTA) for the building.
The notice must:
Leaseholders then have at least 30 days to respond. Any contractor they nominate must be included in your tender process. You do not have to appoint them but you must obtain a quote from them and consider it.
Stage 2 - Notice of Proposals (Estimates)
Once you have obtained at least two estimates, including any estimates from contractors nominated by leaseholders, you must serve a second notice on all leaseholders.
This notice must:
Again, leaseholders have at least 30 days to respond at this stage. The total minimum timeline from Stage 1 to the end of Stage 2 is therefore at least 60 days and in practice, obtaining multiple estimates means the process typically takes three to four months.
Stage 3 - Statement of Reasons (if required)
If you do not appoint the contractor who submitted the lowest estimate, you must serve a statement of reasons explaining why within 21 days of entering the contract. You must also provide this statement to any leaseholder who requests it within six months of the contract being entered into.
Starting works before the consultation is complete. Urgency does not suspend Section 20. If you begin works before the process is finished, you risk losing the ability to recover costs in full. For genuine emergencies, apply to the tribunal for dispensation before starting not after.
Serving notices on the wrong people. Every leaseholder who will pay towards the cost must receive the notices. This includes leaseholders who are not members of your RTM company, leaseholders who are difficult to contact, and leaseholders who have sub-let their flat.
Not allowing the full 30 days. The 30-day consultation period runs from the date of service of the notice, not the date you sent it. If notices are sent by post, allow additional days for delivery. Many consultations are challenged because the observation period was technically too short.
Failing to obtain a quote from a nominated contractor. If a leaseholder nominates a contractor at Stage 1, you must seek an estimate from them. Not doing so is a procedural failure that can invalidate the consultation.
Poor record-keeping. Every notice served, every observation received, every estimate obtained, and every decision made should be documented and retained. If a leaseholder later challenges the consultation, your records are your defence.
For most RTM directors, the Section 20 process is one of the clearest tests of whether your managing agent is worth keeping.
A competent agent should:
What you should not be doing as a volunteer director is managing this process yourself. Section 20 is a specialist area. A single procedural error can cost tens of thousands of pounds and expose you to personal liability. The role of an RTM director in a Section 20 is to approve decisions not to run the administration.
This is a question we get asked regularly. The answer is yes, switching managing agent mid-way through a Section 20 consultation does not automatically invalidate the process.
The consultation belongs to your RTM company, not to the agent. A competent incoming agent can review where the consultation has reached, assess whether the correct procedures have been followed to that point, and continue it to completion. What they cannot do is fix a process that was already fatally flawed before they arrived.
If you are considering switching agents and have a Section 20 in progress, the priority is getting an incoming agent who has direct Section 20 experience and can review the existing process on day one.
The Leasehold and Freehold Reform Act 2024 introduced changes to the Right to Manage that came into force from March 2025, including amendments to RTM company model articles and changes to the non-residential threshold for qualifying buildings. The Section 20 consultation thresholds themselves have not changed, qualifying works remain at £250 per leaseholder and long-term agreements at £100 per leaseholder per year.
Legislative reform in the leasehold sector is ongoing. RTM directors should ensure their managing agent keeps them updated on any changes that affect their compliance obligations, proactively, not reactively.
Section 20 is not optional, does not have exceptions for small buildings or cooperative leaseholders, and cannot be bypassed because the works are urgent (outside of tribunal dispensation). The three-stage process takes a minimum of two to three months. Getting it wrong caps your cost recovery at £250 per leaseholder and can expose directors to personal liability for the shortfall.
The simplest way to protect yourself: appoint a managing agent who treats Section 20 as a routine part of their service, not an occasional crisis to manage around.
Does Section 20 apply even if all leaseholders agree to the works? Yes. The statutory consultation requirement applies regardless of leaseholder agreement. Even if every leaseholder is a member of your RTM company and nobody objects, the formal process must be followed. The only way around this is a tribunal dispensation.
What counts as a "recognised tenants' association" for Section 20 purposes? A Recognised Tenants' Association (RTA) is a formally recognised body representing leaseholders in your building. If your building has one, they must receive all Section 20 notices in addition to individual leaseholders.
Can we get tribunal dispensation before starting works? Yes and in genuine emergencies, this is the correct approach. You apply to the First-tier Tribunal for dispensation from the consultation requirements, explaining the urgency. The tribunal can grant dispensation on such conditions as it thinks fit. Apply before starting works, not after.
What if our managing agent failed to run Section 20 correctly before we appointed them? This is more common than most RTM directors realise. When you appoint a new managing agent, one of their first tasks should be an audit of any ongoing or recently completed Section 20 consultations to identify whether any procedural issues exist. Identifying problems early, before costs are demanded, gives you the best chance of managing the situation, including applying for retrospective dispensation where appropriate.
How long does a Section 20 consultation take? At minimum, two to three months. Stage 1 requires at least 30 days. Stage 2 requires at least 30 days. On top of that, you need time to obtain contractor estimates (which can take several weeks) and time to serve notices correctly. For large or complex projects, four to six months is more realistic.
We manage Section 20 consultations from start to finish for RTM companies and RMCs across London - preparing notices, running the tender process, and keeping directors legally protected throughout. If you have a major works project coming up or are unsure whether your current consultation was handled correctly, get in contact today!
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