Landlord and Tenant Act 1985 Section 20: What RTM Directors Need to Know

If you're a volunteer director of an RTM or RMC, Section 20 of the Landlord and Tenant Act 1985 is the single most important piece of legislation you need to understand. It governs when you must consult leaseholders before spending their money on major works — and the consequences of getting it wrong are severe.

This guide explains the law in plain English, specifically for volunteer directors who aren't property professionals.

What Section 20 actually says

Section 20 of the Landlord and Tenant Act 1985 (as substituted by Section 151 of the Commonhold and Leasehold Reform Act 2002) limits the amount a landlord can recover through service charges for qualifying works or qualifying long-term agreements — unless the landlord has followed the prescribed consultation process.

For RTM companies and RMCs, "landlord" means your company. You are the party with the consultation obligation.

The two key thresholds:

Qualifying works: Any works where the cost to a single leaseholder exceeds £250
Qualifying long-term agreements: Any contract lasting more than 12 months where the cost to a single leaseholder exceeds £100 per year

These thresholds are per leaseholder, not per block. In a 10-flat block with equal shares, qualifying works would be triggered at a total cost above £2,500 (10 × £250).

Why this matters for RTM directors

When leaseholders exercise the Right to Manage, the RTM company takes on the consultation obligations that previously sat with the freeholder or managing agent. Professional agents have systems and legal teams to manage this. Volunteer directors typically have neither.

The consequence of non-compliance is straightforward: if you don't consult properly, the maximum you can recover from each leaseholder is capped at £250 for works (or £100/year for long-term agreements). The rest comes from the reserve fund or — if that's insufficient — from somewhere else.

For a £50,000 roof replacement on a 10-flat block, failing to consult means recovering £2,500 instead of £50,000. That £47,500 shortfall is the RTM company's problem.

The consultation process in brief

The detailed process is set out in the Service Charges (Consultation Requirements) (England) Regulations 2003. For qualifying works, there are three stages:

Stage 1 — Notice of Intention: Write to every leaseholder describing the proposed works, explaining why they're necessary, and inviting observations and contractor nominations. Minimum 30-day response period.

Stage 2 — Obtain estimates: Get at least two estimates. If any leaseholder nominated a contractor, include their quote. Make all estimates available for inspection.

Stage 3 — Notice of Estimates: Write to every leaseholder with the estimates, a summary of Stage 1 observations and your response, and an invitation to comment. Minimum 30-day response period.

After Stage 3, you can appoint a contractor. If you don't choose the cheapest, explain why in writing within 21 days.

For a full step-by-step walkthrough, see our complete Section 20 consultation guide.

Common situations RTM directors face

"The roof is leaking — can we skip the consultation?"

Only if the works are genuinely urgent — meaning delay would cause danger to people or significant damage to the building. A leak that has been developing for months doesn't qualify. A structural failure that poses an immediate safety risk might.

If in doubt, apply to the First-tier Tribunal (Property Chamber) for dispensation from the consultation requirements. The Tribunal can grant dispensation if it's reasonable — but you need to justify it.

"All the leaseholders agree verbally — do we still need to consult?"

Yes. The statutory process must be followed regardless of informal agreement. Verbal consent does not replace the prescribed notices and response periods. A leaseholder who agrees today could challenge the charges at the FTT tomorrow if the process wasn't followed.

"We're renewing the cleaning contract — is that a Section 20 issue?"

If the contract is for more than 12 months and the cost exceeds £100 per leaseholder per year, yes. This catches many directors off guard. Insurance renewals, grounds maintenance, and cleaning contracts can all trigger the long-term agreement consultation.

"What about the major works we did before we took over management?"

If the works were carried out by the previous landlord or managing agent, the consultation obligation was theirs, not yours. But if you're now carrying out new works or entering new contracts, the obligation is yours from the date the RTM company took over.

Related legislation

Section 20 doesn't exist in isolation. Key related provisions:

Section 20B — the 18-month rule for service charge demands
Section 20C — allows leaseholders to apply to the FTT for an order that legal costs incurred by the landlord in connection with tribunal proceedings should not be passed on through the service charge
Section 21B — requires every service charge demand to be accompanied by a summary of the tenant's rights and obligations (the landlord's name and address is a separate requirement under the Landlord and Tenant Act 1987)

Planning your timeline

Use our free Section 20 Timeline Calculator to map out the statutory deadlines for your consultation. Enter your intended start date and get the full 3-stage timeline with actions at each step.

The minimum consultation period is approximately 90 days. In practice, allow 3-5 months from the first notice to starting works.

Sources

This guide applies to England and Wales. This is general information, not legal advice. For specific advice on your consultation obligations, contact a solicitor specialising in leasehold law or the Leasehold Advisory Service (LEASE).