Property Managers and Letting Agencies are regularly tasked with maintaining a property and looking for ways to improve it for its residents. From simple routine maintenance and essential repairs to attractive improvements, these changes will help you keep your property and its residents safe and satisfied.
Despite improvements potentially being in their best interests, it is crucial that you consult your residents throughout the planning process, before you start any work. Failure to do so might not only result in costly consequences for your residents, but it could also harm the reputation of your business. Below, our property expert, Greg Edwards demystifies the consultation procedure and takes you through key 3 steps to comply with the relevant legislation to keep your residents satisfied.
The legal bit
Section 20 (S20) of the Landlord & Tenants Act 1985, which applies to landlords/freeholders, right to manage companies, resident management companies and their managing agents in England and Wales, states that landlords or their agents are required to participate in set consultation procedures with leaseholders before carrying out any work on property above a certain value.
Section 20 is in place to protect leaseholders from having to pay large amounts of money for work carried out to their building. It states that a landlord or letting agent of a property must follow specific consultation procedures before starting work that would require any one leaseholder to contribute an estimated £250 or more. The estimated cost must include VAT and consultancy fees.
In the event of the landlord or letting agent informing leaseholders before work starts, the leaseholders’ contribution to the cost of the work will be capped. With that being said, the landlord or letting agent would only receive £250 from each leaseholder to contribute to the final bill. In addition, failure to comply with the consultation procedures can result in loss of income or worse, a costly negligence claim.
3 steps to keeping your tenants informed
Here are three primary consultation procedures required under Section 20. They include:
Step 1 – Notice of intention
To begin with, you must serve a notice to any leaseholders, detailing the proposed works to the property and why they are necessary. Your notice should also welcome commentary and contractor nominations. You must give leaseholders 30 days to respond.
Step 2 – Estimate statement
You must provide the next notice to all leaseholders as soon as you receive estimates for the work being carried out, including the costs. As with the first notice, you should also welcome commentary and give leaseholders 30 days to respond.
Step 3 – Notice of reasons
Once a contract for the works is rewarded, you must send a final notice to all leaseholders if you didn’t choose the least expensive estimate or contractor nomination, including justification as to why you chose them.