Section 20 of the Landlord & Tenant Act 1985 sets out the three-stage consultation process for qualifying works to a property, in cases where the leaseholder will be asked to contribute over £250 to the costs.
For example, owners of leasehold flats may be asked by a company responsible for maintaining the communal areas of the building to pay towards the cost of major works, such as roof or structural repairs. The leaseholder will be given the opportunity to make comments and ask questions during a Section 20 consultation.
The landlord is obliged to consider and respond to any suggestions. During the next stage of the consultation, they will provide a summary of quotes obtained from contractors, so the leaseholder will have a reasonable idea of what the charges will be. If the landlord does not select the cheapest quote, they must notify the leaseholder of their reasons.
Sometimes, even if the Section 20 consultation process has been carried out correctly, disputes can still arise about the charges a leaseholder is requested to pay. Both parties have the right to refer to a First-tier Tribunal in this case.
An application can be made to the Tribunal either before the works have been carried out, or afterwards, even if the charge has already been paid. The Tribunal will examine the provisions of the lease, and will determine whether the charges are payable. The leaseholder is not obliged to pay any charges that are not provided for in the lease.
If the Tribunal finds that service charges are payable, they will determine which party is responsible for making the payment and to whom; they will fix a deadline for payment; and they will decide how the charge should be paid, such as through a direct debit.
If either party wishes to avoid referring to the Tribunal, then the dispute can also be resolved through third party mediation.
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