Section 20 Dispensation: When Consultation Fails

If you have started qualifying works without completing Section 20 consultation — or completed it defectively — your recovery is capped at £250 per leaseholder unless the tribunal dispenses with the requirements. You apply to the First-tier Tribunal under section 20ZA, and the tribunal may dispense if it is satisfied that doing so is reasonable.

The test is narrower and more favourable to landlords than most directors expect. It is not whether you broke the rules. It is whether the leaseholders were actually prejudiced by your breach.

This applies to England. The Welsh consultation regulations are separate, and in Wales the tribunal is a different body.

The statutory power

Section 20ZA(1) of the Landlord and Tenant Act 1985 provides:

"Where an application is made to the appropriate tribunal for a determination to dispense with all or any of the consultation requirements in relation to any qualifying works or qualifying long term agreement, the tribunal may make the determination if satisfied that it is reasonable to dispense with the requirements."

Three things are worth reading carefully.

"All or any." Dispensation is not all-or-nothing. The tribunal can dispense with a single defective element while the rest of your consultation stands.

"May." It is a discretion, not a right. You have to persuade the tribunal.

"Reasonable to dispense." The statutory test is reasonableness of dispensing — not whether your breach was reasonable. Those are different questions, and confusing them is why directors arrive at the tribunal arguing the wrong thing.

Which tribunal is "the appropriate tribunal"? Section 20ZA does not name one. Section 38 of the 1985 Act supplies the answer, and it splits:

"'appropriate tribunal' means— (a) in relation to a dwelling in England the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal; and (b) in relation to a dwelling in Wales, a leasehold valuation tribunal;"

So for a block in England, the appropriate tribunal is the First-tier Tribunal (Property Chamber) — which is what the rest of this guide assumes. A Welsh block applies to a leasehold valuation tribunal instead, and consults under the separate Welsh regulations rather than the England-only 2003 Regulations cited below.

The prejudice test — what the tribunal actually asks

The leading authority is Daejan Investments Limited v Benson and others [2013] UKSC 14, decided by the Supreme Court on 6 March 2013. Lord Neuberger framed the question at paragraph 44:

"the issue on which the LVT should focus when entertaining an application by a landlord under section 20ZA(1) must be the extent, if any, to which the tenants were prejudiced in either respect by the failure of the landlord to comply with the Requirements."

"Either respect" means the two things consultation exists to protect against: paying for inappropriate works, and paying more than is appropriate for necessary works.

The judgment goes further at paragraph 45:

"in a case where it was common ground that the extent, quality and cost of the works were in no way affected by the landlord's failure to comply with the Requirements, I find it hard to see why the dispensation should not be granted (at least in the absence of some very good reason): in such a case the tenants would be in precisely the position that the legislation intended them to be – ie as if the Requirements had been complied with."

So the question is not "how badly did the directors mess up?" It is "did the leaseholders end up worse off because of the mess-up?" A serious procedural failure that cost leaseholders nothing is more likely to be dispensed with than a minor failure that demonstrably led to a worse or dearer job.

Note the parenthetical, though. Lord Neuberger left room for "some very good reason" to refuse even where no prejudice is shown, and section 20ZA is a discretion in any event. An absence of prejudice is a strong position to apply from, not an automatic grant.

The practical burden falls on leaseholders to identify the prejudice they say they suffered — Lord Neuberger put it directly: "the factual burden of identifying some relevant prejudice that they would or might have suffered would be on the tenants" (Daejan, para 67). Vague objection to the process, without a linked financial or qualitative consequence, tends not to succeed.

When directors actually need this

The realistic scenarios in a self-managed block:

• Emergency works. A roof fails in November and water is entering flats. You cannot run a 30-day consultation, then an estimates stage, then a notice of award, before making the building watertight. You do the works and apply for dispensation.
• A defective notice. The notice of intention omitted the invitation to nominate a contractor, or described the works too vaguely. The notice requirements guide covers what makes a notice defective.
• A missed stage. Stage 1 and stage 3 were served but the estimates stage was skipped.
• Missed leaseholders. One flat was omitted from service because the contact details were stale.
• The threshold was crossed unnoticed. Works were budgeted below £250 per leaseholder and came in above it. Our free Section 20 Timeline Calculator helps catch this before it happens.

The last one is the most common and the most avoidable.

What applying involves

1. Apply to the First-tier Tribunal (Property Chamber) under section 20ZA. Do it as soon as you know consultation has failed — waiting until a leaseholder challenges the demand puts you on the back foot.
2. Set out precisely what you did not comply with. Do not minimise it. The tribunal will establish it anyway, and candour helps.
3. Explain why, with evidence. For emergency works: photographs, the contractor's report, dates. The narrative that works is "here is why the timetable was impossible", not "we did not realise".
4. Address prejudice head-on. Show the works were necessary, the price was competitive, and leaseholders got the same outcome they would have got from a compliant process. Quotes from other contractors help even if you obtained them late.
5. Expect conditions. The tribunal can grant dispensation on terms — commonly that the landlord bears the leaseholders' reasonable costs of the application.

Fees are set by the tribunal's published fee schedule and change from time to time; check the current schedule when you apply rather than relying on a figure quoted in a guide. The larger cost is usually professional support if the application is contested.

How to avoid needing it

Dispensation is a remedy, not a plan. Three habits prevent almost all of these:

• Test the £250 threshold on the worst-case estimate, not the hoped-for one. Consulting on works that turn out not to need it costs you time. Not consulting on works that did costs you the recovery.
• Consult early on anything cyclical. Redecoration, roof work and lift refurbishment do not arrive unexpectedly. Our service charge budget planning guide covers building them into the annual cycle.
• Keep leaseholder contact details current. Most service failures are data failures.

And if consultation has already gone wrong: apply. Directors sometimes hope nobody notices, absorb the shortfall into the next budget, and create a much larger problem when a leaseholder eventually challenges the service charge at the tribunal. A dispensation application made promptly, with a candid explanation and evidence that nobody lost out, is a far better position than a silent under-recovery discovered two years later.

LevyBoard is building guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 compliance, designed for people who did not sign up to become property managers.

This guide applies to England; the Welsh consultation regulations are separate and in Wales the appropriate tribunal is a leasehold valuation tribunal, not the First-tier Tribunal. This is general information, not legal advice. Dispensation applications turn on the specific facts of the failure and the prejudice alleged — for anything beyond a straightforward emergency-works application, take advice from a solicitor specialising in leasehold law, or start with the free service at the Leasehold Advisory Service (LEASE).

Sources

• Landlord and Tenant Act 1985, section 20ZA — consultation requirements: supplementary
• Daejan Investments Ltd v Benson [2013] UKSC 14 — Supreme Court, 6 March 2013
• Landlord and Tenant Act 1985, section 38 — definition of "appropriate tribunal" (England / Wales)
• Service Charges (Consultation Requirements) (England) Regulations 2003 — England only
• SI 2003/1987, regulation 6 — the £250 consultation threshold
• First-tier Tribunal (Property Chamber)
• Leasehold Advisory Service (LEASE)