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If you're an RTM director or freeholder, the phrase \"Section 20 consultation\" can sound intimidating. It is often associated with lengthy paperwork, legal requirements and expensive building projects.

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In reality, Section 20 is simply a process designed to ensure leaseholders are consulted before certain major costs are recovered through the service charge. Understanding when it applies, and planning for it early, can help avoid delays, disputes and financial surprises.

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Here's what every RTM director should know.

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What Is Section 20 Consultation?

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Section 20 refers to the consultation requirements set out in the Landlord and Tenant Act 1985.

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The legislation protects leaseholders by ensuring they are given information and an opportunity to comment before they are asked to contribute towards significant expenditure.

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Rather than being a barrier to carrying out essential works, it is intended to promote transparency and fairness throughout the process.

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When Is Section 20 Required?

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There are two common situations where consultation may be necessary.

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Qualifying Works

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Consultation is generally required if any individual leaseholder will contribute more than £250 towards a programme of works.

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Examples include:

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Qualifying Long-Term Agreements

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Consultation may also be required when entering into a long-term contract lasting more than 12 months if any leaseholder's contribution exceeds £100 in a financial year.

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This could include contracts for:

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Why Does It Matter?

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Failure to follow the correct consultation process can have significant financial consequences.

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In many cases, if consultation should have taken place but did not, recovery from each leaseholder may be limited to the statutory thresholds unless the First-tier Tribunal grants dispensation.

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For directors, that could leave the management company facing a substantial shortfall.

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Good planning is therefore just as important as good project management.

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What Does the Consultation Process Involve?

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Although every project differs, the consultation usually follows three stages.

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Stage 1 – Notice of Intention

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Leaseholders are informed that works are being considered.

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They are invited to:

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Stage 2 – Estimates

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Once quotations have been obtained, leaseholders are given information about the estimates and another opportunity to comment before decisions are made.

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Stage 3 – Notice of Reasons

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If the chosen contractor is not the lowest estimate, the reasons for the appointment are explained to leaseholders.

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The aim is transparency rather than simply selecting the cheapest quotation.

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Common Misunderstandings

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\"Section 20 gives leaseholders a vote.\"

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Not necessarily.

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Leaseholders have the right to be consulted and to submit observations, but they do not automatically decide which contractor is appointed.

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Directors and managing agents remain responsible for making decisions that are reasonable and in the best interests of the building.

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\"The cheapest quote must always be accepted.\"

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Again, no.

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Price is only one factor.

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Experience, quality, programme, specification and contractor capability are all legitimate considerations when selecting a contractor.

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\"Section 20 only applies to huge refurbishment projects.\"

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Not always.

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Some relatively modest works can exceed the statutory thresholds, particularly in smaller residential blocks where costs are shared between fewer leaseholders.

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Why Early Planning Makes All the Difference

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One of the biggest mistakes RTM companies make is identifying major works too late.

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If consultation only begins once repairs become urgent, directors may face:

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The best-managed buildings identify future works well in advance through regular inspections and planned maintenance programmes.

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This allows sufficient time for budgeting, consultation and contractor selection.

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How Managing Agents Support the Process

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Professional managing agents help directors by coordinating the administrative and operational aspects of Section 20 consultation.

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This typically includes:

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This structured approach helps reduce administrative burden while ensuring the process remains organised and compliant.

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Common Mistake Alert

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A common misconception is treating Section 20 as a paperwork exercise that starts once contractors have already been appointed.

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In reality, successful consultation begins much earlier—with planned maintenance, realistic budgeting and clear communication.

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The more preparation completed before consultation starts, the smoother the project usually becomes.

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Quick-Check Framework

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Before commencing major works, ask:

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If the answer to any of these questions is uncertain, professional advice should be sought before committing to contractors or issuing demands.

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Implementation Tip

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Don't wait until a roof starts leaking or scaffolding becomes unavoidable.

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Maintain a rolling maintenance plan that looks two to five years ahead. Identifying future projects early allows directors to budget properly, build reserve funds where appropriate and complete statutory consultation without unnecessary pressure.

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Professional Support for Section 20 Projects

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Section 20 consultation is ultimately about protecting both leaseholders and directors through a transparent decision-making process.

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When projects are planned early, properly budgeted and professionally managed, consultation becomes a structured part of good building management rather than an obstacle to progress.

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tlc Estate Agents supports RTM companies, freeholders and residential management companies across Kensington and Chelsea with proactive maintenance planning, major works coordination, compliance oversight and structured financial management, helping directors navigate Section 20 requirements with confidence.

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If your building is approaching major works or you're unsure whether Section 20 consultation applies, contact tlc Estate Agents to discuss your building's requirements.

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This article provides general guidance only and should not be relied upon as legal advice. Professional advice should always be obtained where required.

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Frequently Asked Questions

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What is a Section 20 consultation?

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A Section 20 consultation is the legal process that requires leaseholders to be consulted before certain major works or long-term contracts are carried out and the costs are recovered through the service charge. It is designed to promote transparency and ensure leaseholders have an opportunity to comment on proposed expenditure.

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When does a Section 20 consultation apply?

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Section 20 consultation is generally required if an individual leaseholder's contribution towards qualifying works will exceed £250, or if their contribution towards a qualifying long-term agreement will exceed £100 in any year. If you're unsure whether these thresholds apply, it's advisable to seek professional guidance before commencing the works.

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What happens if Section 20 consultation isn't followed correctly?

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If the statutory consultation process isn't completed when required, the amount that can be recovered from each leaseholder may be limited unless the First-tier Tribunal grants dispensation. This can leave RTM companies or freeholders responsible for a significant shortfall in funding.

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Do leaseholders choose the contractor during a Section 20 consultation?

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No. Leaseholders have the right to review proposals, submit observations and, in some cases, nominate contractors to provide estimates. However, the final decision remains with the RTM company or freeholder, provided the appointment is reasonable and the consultation requirements have been properly followed.

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Can a managing agent oversee the Section 20 consultation process?

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Yes. An experienced block managing agent can coordinate the consultation process, obtain competitive quotations, prepare statutory notices, manage leaseholder communications and help ensure the project progresses in a structured and compliant manner.

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