Section 20 Process Summarised
Before major works are undertaken that will have a financial impact on each leaseholder in excess of £250 per flat we are required to consult with the Leaseholders.
The purpose of this is to introduce the Section 20 process and explain the ramifications to you as a leaseholder. There are two periods of consultation that are required before the works can be instructed. Each of these periods of consultation is for a period of 30 days from receipt of the notice.
The process that is followed is that an RICS surveyor is appointed to carry out an initial inspection of the common parts of the property and identify areas that are in need of cyclic repair or redecoration. A specification of works is produced by the surveyors and this is the document to which the contractors tender. This ensures that all contractors are quoting for the same works to the development and are being quoted on a like for like basis. The first Notice advises that the time for nominating a contractor to be considered for tendering is during the first 30 days of the consultation process. The surveyors have a bank of reputable forms available to quote for the works being considered and they are tasked with ensuring that we have 3 tenders for the contract to provide reassurance that value for money is being achieved. If a leaseholder wishes to nominate a contractor the company must be able to demonstrate to the surveyors overseeing the process that they have the required experience, insurances and other minimum qualifications to undertake the works. Copies of the specification of works are available directly from the offices of the surveyors or can be emailed directly by Nationspaces Developments on request. We would confirm that any contractors considered for process are wholly unconnected with the managing agents or the Freeholder.
The second consultation document is produced once the surveyors have received, checked and analysed the tenders received. We will detail in the second notice the total prices that each contractor has quoted for the works and we will select the cheapest of these quotes as the one we are intending to proceed with at the end of the second period of consultation. A more expensive quote could be accepted if this was the preferred bidder from the Leaseholders. There will also be costs included for the surveyor’s fees to oversee the process and to undertake site inspections when the works are being carried out to ensure the quality of the finish. An administration fee is also charged by Nationspaces Developments to cover the costs of carrying out the consultation and collecting in the Leaseholders share of the costs.
From a financial prospective it is important to realise the sinking funds will be used to reduce the overall burden to the Leaseholders but there will be a substantial contribution required by each Lessee that has to be paid in full before the works will be instructed. We would also make you aware that it is the surveyor who has the expert knowledge and has been involved at each stage of the proposed works that signs off on the finished works. This is not the role of the individual leaseholders as the works are a collective venture and the surveyor is the appointed expert. Due to the number of individual leaseholders involved each with their own view, for the development and for their particular needs it is not possible to organise the repairs as a committee. The surveyors are the individuals responsible for the scope of the works and overseeing these being completed.
In summary the Section 20 process is undertaken to meet the lease requirements of maintaining, repairing and/or redecorating the leasehold properties on the development. Your Lease specifies the share you will contribute towards the total cost. The costs will be more than £250 per flat and could in some circumstances be substantially more. The sinking funds will be used to reduce the overall burden. If the costs of the works are substantially greater than the balances in the sinking funds the annual contribution to these funds may be increased following completion of the section 20 programme. We are obliged to take into account the opinions of the leaseholders that contact us during the notice periods, but once the consultations have ended and the invoices for payment are issued the time for consultation has finished and the work programme cannot be amended. The landlord has an obligation to arrange these works to bring the building back to peak condition and it is the leaseholders’ obligation to meet the cost of their share of the works.