https://levyboard.co.uk Guides, tools, and insights for volunteer RTM and RMC directors managing blocks of flats in England & Wales. en-gb https://levyboard.co.uk/blog/service-charge-apportionment/ https://levyboard.co.uk/blog/service-charge-apportionment/ Sat, 07 Nov 2026 00:00:00 GMT How service charges are split between flats: lease percentages, fair-proportion clauses, multiple schedules on one estate, and what to check first. Section 35(1) allows "any party to a long lease of a flat" to apply to the tribunal for an order varying the lease, and one of the grounds in section 35(2) is that the lease fails to make satisfactory provision for "(f) the computation of a service charge payable under the lease". Section 35(4) spells out when that ground is met — where the lease provides for the charge to be a proportion of expenditure, other tenants pay proportions too, and: > "the aggregate of the amounts that would, in any particular case, be payable by reference to the proportions referred to in paragraphs (a) and (b) would either exceed or be less than the whole of any such expenditure." In other words, if the contributing shares add up to 103%, the block is over-recovering; at 97%, with nobody else liable for the balance, it is under-recovering and somebody — usually the company — absorbs the gap. Either way, there is a statutory route to fix the leases rather than living with it. In England the application goes to the First-tier Tribunal; for property in Wales, section 35(9) says it goes to a leasehold valuation tribunal. What the directors should not do is quietly rebalance the percentages on the demands. A demand that charges a flat more than its lease allows is open to challenge. ## Reasonableness still applies A correct share of an unreasonable cost is still an unreasonable charge. Section 19(1) of the Landlord and Tenant Act 1985 provides that relevant costs count towards a service charge "only to the extent that they are reasonably incurred". Apportionment decides how a cost is split; section 19 decides how much of it can be passed on at all. And a leaseholder who disputes the figure has somewhere to go. Under section 27A of the 1985 Act, an application can be made to the tribunal "for a determination whether a service charge is payable and, if it is, as to" — among other things — "(c) the amount which is payable". A clear record of each flat's share and where it comes from is the best answer to that application. ## Apportionment, consultation and the £250 threshold Apportionment also decides whether major works need consultation. In England, Section 20 consultation is triggered when works will cost any one leaseholder more than £250 — so it is each flat's share of the works, not the total bill, that you test. On an estate with schedules, the same roof job can cost a Block A flat £400 and nothing at all for a Block B flat. Our [Section 20 consultation guide](/blog/section-20-consultation-guide/) covers the process once the threshold is crossed. ## How LevyBoard handles it In LevyBoard you set up each flat with the percentage its lease sets for each cost centre — have the leases to hand, or import the spreadsheet you already keep. Demands are then calculated per cost centre, with the arithmetic shown. The [sample service charge demand](/sample-service-charge-demand.pdf) shows one flat's share across two cost centres and its reserve contribution, with the arithmetic shown. *This guide covers blocks in England and Wales and is general information based on the Landlord and Tenant Act 1985 and the Landlord and Tenant Act 1987 as published on legislation.gov.uk, not legal advice. How a particular lease apportions costs turns on its exact wording — where the leases conflict or the shares do not add up, 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 1987, section 35 — application by party to lease for variation of lease - Landlord and Tenant Act 1985, section 19 — limitation of service charges: reasonableness - Landlord and Tenant Act 1985, section 27A — liability to pay service charges: jurisdiction - Landlord and Tenant Act 1985, section 20 — consultation requirements - Service Charges (Consultation Requirements) (England) Regulations 2003, regulation 6 — the £250 threshold - HM Land Registry — get information about property and land (including copies of deeds) ]]> https://levyboard.co.uk/blog/section-48-notice-landlord-address/ https://levyboard.co.uk/blog/section-48-notice-landlord-address/ Sat, 24 Oct 2026 00:00:00 GMT What a section 48 notice is, why service charges are not due until one is given, and what it means for RMC and RTM directors running a block. Section 48(1) of the Landlord and Tenant Act 1987 provides: > "A landlord of premises to which this Part applies shall by notice furnish the tenant with an address in England and Wales at which notices (including notices in proceedings) may be served on him by the tenant." Three things in that sentence matter in practice. **"By notice."** The address has to be given in writing. The Act's general rule on notices, in section 54(1), is that a notice under the Act "shall be in writing" and "may be sent by post". The courts have not read this strictly. In Glen International Ltd v Triplerose Ltd [2007] EWCA Civ 388, the Court of Appeal relied on this summary of the law from an earlier Court of Appeal case, Drew-Morgan v Hamid-Zadeh: "The notice required by Section 48(1) is not very onerous. The tenant must be told of an address in England and Wales at which he may serve notices on the Landlord: no more, no less." The notice does not have to say that the address is for serving notices, and where the landlord's name and address is stated in the lease without limitation or qualification, "there is no need for a separate notice". Oral notification is not enough. **"In England and Wales."** A director's holiday address in Spain, or a parent company's office in Scotland, does not do the job. The address itself has to be in England or Wales. **"Including notices in proceedings."** This is the address a leaseholder (or their solicitor) uses to start a claim or serve a tribunal application on the landlord. It has to be somewhere post is actually opened. Part VI of the 1987 Act — the part section 48 sits in — applies, under section 46(1), to "premises which consist of or include a dwelling and are not held under a tenancy to which Part II of the Landlord and Tenant Act 1954 applies". A residential block let on long leases is squarely inside it. ## What happens if the notice is never given Section 48(2) is the part that gives the rule its teeth: > "Where a landlord of any such premises fails to comply with subsection (1), any rent, service charge or administration charge otherwise due from the tenant to the landlord shall (subject to subsection (3)) be treated for all purposes as not being due from the tenant to the landlord at any time before the landlord does comply with that subsection." Read the last words carefully: "at any time before the landlord does comply". The charge is suspended, not cancelled. Once a valid notice is given, the money becomes due. But until then, a leaseholder who has not paid is not in arrears — so there is nothing yet to chase, and none of the [recovery steps a director would normally take](/blog/service-charge-arrears-recovery-guide/) can properly begin. That is why section 48 tends to surface at the worst moment. A director chases a large arrears balance, the leaseholder takes advice, and the first question back is whether a section 48 notice was ever served. If nobody can show that the leaseholder was given an address in writing, the chase stops until one is. There is one exception. Section 48(3) switches the rule off while a court or tribunal has appointed a receiver or manager whose functions include receiving the charges. That is rare in a volunteer-run block. ## Section 48 is not the same as section 47 The two sections sit next to each other and are often cited together, but they are separate duties. | | Section 47 | Section 48 | |---|---|---| | What it covers | The contents of a written demand | Giving each leaseholder, in writing, an address for service | | What must be given | The landlord's name and address — plus an England and Wales address for service if the landlord's address is outside England and Wales | An address in England and Wales for serving notices on the landlord | | What is suspended if it is missing | The service charge (or administration charge) part of that demand | Rent, service charge and administration charges generally | | How often | Every demand | Once — and again whenever the address changes | Section 47(1) requires that a written demand "must contain" the landlord's name and address. The two can overlap: the case law above accepts an address in England and Wales stated in the lease, and other written documents can sometimes do the same job. But whether a particular document was enough turns on its facts. In Glen International, a letter giving a "correspondence address" for one dispute was held not to be a section 48 notice. The lease can do the job if it states the landlord's current address in England and Wales, but an address in an old lease or a demand may be out of date or open to argument. A dedicated section 48 notice, given to each leaseholder and recorded, is the safe course because you can prove it. And serving a section 48 notice does not excuse a demand that leaves out the landlord's details. ## Who is "the landlord" in your block? This is where blocks run by their own leaseholders differ from a buy-to-let flat, and where the answer depends on how your block is structured. **If your RMC owns the freehold, the RMC is the landlord.** The section 48 duty is the company's. That means the directors need to make sure every leaseholder has had a notice giving the company's address for service — and that the notice is in the company's name, not a director's. Our guide to [freehold residents management companies](/blog/freehold-residents-management-company/) covers how that structure works. **If you have taken over under right to manage, the freeholder is still the landlord — and the RTM company is brought in too.** The Commonhold and Leasehold Reform Act 2002 modifies sections 46 to 48 where an RTM company manages the premises. Schedule 7, paragraph 12(2) provides: > "References to the landlord include the RTM company." The word is "include". Compare paragraph 4(2) of the same Schedule, which deals with the service charge provisions of the 1985 Act and says that references to the landlord "are to the RTM company" — a straight substitution. For sections 46 to 48 the RTM company is added alongside the landlord rather than put in its place, and the Act does not spell out what that means for a section 48 notice. In particular, whether an RTM company can satisfy section 48 by giving a notice in its own right is not settled. The cautious course follows from the part that is clear: the freeholder is still the landlord, and the duty in section 48(1) is the landlord's. So make sure every leaseholder holds a section 48 notice **in the freeholder's name** giving a working address in England and Wales. If the RTM company sends it, it sends it on the freeholder's behalf and says so — with the freeholder's agreement to the address used. Do not assume a notice the freeholder gave years ago still works: if that address has gone stale, the leaseholders need a fresh one. The freeholder's section 48 address still matters to the RTM company in another way. Under section 111(3) of the 2002 Act, the RTM company can give the landlord notices under the right-to-manage provisions at "the address last furnished to a member of the RTM company as the landlord's address for service in accordance with section 48 of the 1987 Act" — or, if none, the address on its demands — unless the landlord has notified the company of a different address in England and Wales. Keep a copy of any section 48 notice a leaseholder received from the freeholder — it is usually the address your company will use. The [right to manage process guide](/blog/right-to-manage-process/) covers the claim itself. ## When to give a section 48 notice The statute does not set a calendar. In practice, the moments that matter in a self-managed block are: - **When the company takes over.** On acquiring the right to manage, or when an RMC stops using a managing agent and starts issuing demands itself. If the agent's office was the address for service, that address is about to stop working. - **Whenever the address changes.** A new company secretary, a move of registered office, a change of the director who opens the post. - **When a flat changes hands.** A new leaseholder has not received the notice the previous owner did. Build it into your new-owner pack. - **Before you chase arrears.** If you are about to send a final reminder, first check that the leaseholder concerned has had a notice and that you can prove it. ## What to put in it Keep it plain. A section 48 notice for a block usually needs: 1. **The landlord's full name** as registered — your RMC's, if it owns the freehold; the freeholder's, if you are an RTM company sending the notice on its behalf (and say that you are). 2. **The flat and the leaseholder** it is addressed to. 3. **The address in England and Wales** at which notices, including notices in proceedings, may be served on the landlord. 4. **The date.** 5. **A short line saying why they are receiving it** — quoting section 48(1) is the simplest way. Then keep proof of when and how you gave it to each leaseholder. That record is what you will need when somebody asks. A demand is a different document with its own requirements — the landlord's details under section 47, and the prescribed summary of tenants' rights and obligations under the 1985 Act. If you are setting up demands for the first time, our free [service charge demand generator](/tools/service-charge-demand-generator/) shows what a demand needs to carry. ## A worked example A 14-flat block, freehold owned by its RMC. For years the managing agent's office was the address on every notice. The directors give the agent notice and start issuing demands themselves in January. In March, Flat 9 is two quarters behind. Before chasing, the secretary checks the file: the notices the leaseholders hold all give the agent's office, which the agent has now closed. On a cautious view the RMC has not given a working address for service, so the safe step is to send every leaseholder a fresh section 48 notice giving the company's own address in England — and only then pursue Flat 9. If a leaseholder argues the arrears were never due, the company can show the date its notice was given. Ten minutes of paperwork at handover would have avoided the question entirely. ## How LevyBoard handles it LevyBoard produces a section 48 notice for each flat in the landlord's name — given on the landlord's behalf where your company is an RTM company or a managing agent — and records when it was given, alongside the demands, Section 20 notices and arrears letters a volunteer director has to issue. You can see what one looks like in this [sample section 48 notice](/sample-section-48-notice.pdf). *This guide covers blocks in England and Wales. It is general information based on the Landlord and Tenant Act 1987 and the Commonhold and Leasehold Reform Act 2002 as published on legislation.gov.uk, not legal advice. Whether a particular notice was validly given turns on its facts — if arrears or a dispute depend on it, 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 1987, section 48 — notification by landlord of address for service of notices - Landlord and Tenant Act 1987, section 47 — landlord's name and address to be contained in demands - Landlord and Tenant Act 1987, section 46 — application of Part VI - Landlord and Tenant Act 1987, section 54 — notices - Glen International Ltd v Triplerose Ltd [2007] EWCA Civ 388 — what section 48 requires (paragraph 11) - Commonhold and Leasehold Reform Act 2002, Schedule 7 — right to manage: statutory provisions (paragraphs 4 and 12) - Commonhold and Leasehold Reform Act 2002, section 111 — notices ]]> https://levyboard.co.uk/blog/section-20-dispensation/ https://levyboard.co.uk/blog/section-20-dispensation/ Sat, 03 Oct 2026 00:00:00 GMT What to do when Section 20 consultation goes wrong: how tribunal dispensation works, the relevant prejudice test from Daejan v Benson, and how to apply. 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](/blog/section-20-notice-templates/) 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](/tools/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](/blog/service-charge-budget-planning/) 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](/blog/challenge-service-charge-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. Dispensation is the remedy for a consultation that went wrong; the cheaper route is not needing it. LevyBoard provides guided Section 20 consultation workflows for major works alongside service charge accounting and arrears tracking, for volunteer directors 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) ]]> https://levyboard.co.uk/blog/section-20-notice-templates/ https://levyboard.co.uk/blog/section-20-notice-templates/ Sat, 26 Sep 2026 00:00:00 GMT What a Section 20 notice of intention must actually contain under the 2003 Regulations, the 30-day rule, and the mistakes that make a notice defective. Section 20 of the Landlord and Tenant Act 1985 creates the duty to consult and the cap on recovery if you do not. It does not tell you what to write. The content of each notice comes from the Service Charges (Consultation Requirements) (England) Regulations 2003. Which schedule governs your consultation depends on the situation: | Situation | Schedule | |---|---| | Qualifying works, public notice required (OJEU-type procurement) | Schedule 4, Part 1 | | Qualifying works, no public notice required — **the usual case for a self-managed block** | Schedule 4, Part 2 | | Qualifying long term agreements | Schedules 1 and 2 | | Works under an existing qualifying long term agreement | Schedule 3 | Almost every self-managed block consulting on major works is in Schedule 4, Part 2. That is the one to work from unless you have a specific reason to think otherwise. Our [Section 20 consultation guide](/blog/section-20-consultation-guide/) covers the three-stage process end to end, and the [requirements checklist](/blog/section-20-requirements-checklist/) is the short-form version. ## What the notice of intention must contain Under Schedule 4, Part 2, paragraph 1(2), the notice of intention must: - describe in general terms the proposed works, or specify a place and hours at which a description may be inspected - state, in the words of the Regulations, **"the landlord's reasons for considering it necessary to carry out the proposed works"** - invite the making of written observations - specify the address to which observations may be sent, **that they must be delivered within the relevant period**, and the date on which the relevant period ends Note what that last requirement is and is not. Paragraph 1(2)(d)(ii) requires the notice to state that observations **must be delivered within the relevant period** — a delivery test, tied to the period regulation 2 defines, not a receipt deadline the landlord picks. A notice that gives only a landlord-chosen "received by" cut-off has stated the wrong test and dropped a mandatory limb. Paragraph 1(3) adds a requirement that is frequently missed. The notice must > "invite each tenant and the association (if any) to propose, within the relevant period, the name of a person from whom the landlord should try to obtain an estimate for the carrying out of the proposed works." That is the nomination right. A notice that describes the works and asks for observations but never invites nominations has left out a mandatory element. ## The 30 days is defined — do not estimate it Regulation 2 defines "the relevant period" as > "the period of 30 days beginning with the date of the notice" Two things follow. First, it is 30 days, not a month, and not "about four weeks." Second, it begins with the date of the notice — so the date on the notice is doing real work and needs to be right. Build in service time on top. Thirty days beginning with the date of the notice is not thirty days from when a leaseholder actually receives it, and a leaseholder who received a notice with three days left is exactly the kind of leaseholder who later argues they were prejudiced. Our free [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/) works the dates out from your start date, and the [Section 20 Notice Generator](/tools/section-20-notice-generator/) drafts the notices for each stage for you to check before you send them. ## The mistakes that make a notice defective **Describing the works too vaguely.** "External repairs" is not a general description of proposed works. "Replacement of the flat roof over the rear elevation, including new insulation and rainwater goods" is. **Stating what you are doing but not why.** The Regulations ask for the landlord's *reasons for considering it necessary*. A notice that describes works without justifying them has missed a limb. **Omitting the nomination invitation.** The single most common omission in notices produced from a generic template. **Getting the observation address wrong.** If observations go to an address nobody monitors, you have technically complied and practically failed. Use an address a director actually checks. **Dating the notice before you send it.** The 30 days runs from the date of the notice. Post-dating or back-dating shortens the real window and creates an argument you do not want to have. **Ignoring observations that arrive.** The duty is to have regard to observations. There is no point running a compliant consultation and then filing the responses unread — and a leaseholder who can show their observation went nowhere has the beginnings of a prejudice argument. Where consultation has already gone wrong, the remedy is [an application to the tribunal to dispense with the requirements](/blog/section-20-dispensation/) under section 20ZA of the 1985 Act. ## A practical sequence 1. Establish that the works are qualifying — more than £250 for any one leaseholder. 2. Identify the right schedule (usually Schedule 4, Part 2). 3. Draft the notice of intention with all five elements: description, reasons, invitation to observe, address and deadline, nomination invitation. 4. Date it the day you send it. Serve it on every leaseholder and on any recognised tenants' association. 5. Diarise 30 days beginning with the date of the notice. 6. Log every observation received, and record what you did about each one. 7. Move to the estimates stage only after the relevant period has expired. Keep the served copies. If a service charge is later challenged, the records are what prove the consultation happened — see the [FTT challenge guide](/blog/challenge-service-charge-tribunal/) for what a tribunal will look for. A template is the easy half; the dates and the order are what catch people out. LevyBoard provides guided Section 20 consultation workflows for major works alongside service charge accounting and arrears tracking, for volunteer directors who did not sign up to become property managers. *This guide applies to England; the Welsh consultation regulations are separate. This is general information, not legal advice. Notice content and service requirements are technical and the consequences of getting them wrong are financial — for a large or contested consultation, have the notices reviewed by 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 20 — limitation of service charges: consultation requirements - Service Charges (Consultation Requirements) (England) Regulations 2003 - SI 2003/1987, Schedule 4 — consultation requirements for qualifying works - SI 2003/1987, regulation 2 — definition of "the relevant period" - Leasehold Advisory Service (LEASE) ]]> https://levyboard.co.uk/blog/building-safety-act-directors/ https://levyboard.co.uk/blog/building-safety-act-directors/ Sat, 19 Sep 2026 00:00:00 GMT Building Safety Act for RTM and RMC directors: the 18m higher-risk threshold, the 11m Schedule 8 gate, and which leases the cost caps protect. Section 65 of the Building Safety Act 2022 sets the threshold. A higher-risk building in England > "is at least 18 metres in height or has at least 7 storeys" and > "contains at least 2 residential units" Note the "or". A seven-storey building under 18 metres still qualifies. If your block is anywhere near either figure, get the measurement confirmed rather than estimating — the consequences of being wrong run in both directions. Most self-managed blocks are well under this. A three-storey conversion or a five-storey purpose-built block is not a higher-risk building, and the rest of this section does not apply to you. Whether the Schedule 8 cost protections below apply is a separate question, on a lower threshold. The five-storey block is very likely inside them. The three-storey conversion, unless it is at least 11 metres high, is outside them altogether — Schedule 8 gives it nothing. ## When your company is the "accountable person" If your block does meet the threshold, section 72 defines who carries the duties. An accountable person is, in essence: - a person holding a legal estate in possession in any part of the common parts, or - a person who holds no legal estate but is under a relevant repairing obligation in respect of the common parts. That second limb is the one RTM directors need to read twice. An RTM company holds no legal estate — the freeholder keeps the freehold — but it *does* take on the repairing obligations for the common parts when it acquires the right to manage. Our guide to [what the Right to Manage transfers](/blog/right-to-manage-process/) covers that handover; section 96 of the 2002 Act puts repairs and maintenance squarely in the transferred set. An RMC that owns the freehold is caught by the first limb instead. Either way, the practical consequence is the same: in a higher-risk building, the company you volunteer for may carry statutory building safety duties, including registration of the building and duties around assessing and managing building safety risks. The government's guidance on registering a high-rise residential building is the starting point. This is not a duty to take on informally. If your block is over the threshold and nobody has established who the accountable person is, that is a question for the company's solicitor, and it should go on the agenda of the next board meeting rather than waiting for an [AGM](/blog/rtm-rmc-agm-guide/). ## The Schedule 8 cost protections — the part that affects your service charge This reaches further down the height range than the higher-risk regime, and it is where directors most often assume they can recover a cost they cannot. But it has its own gate, and a large number of self-managed blocks sit outside it entirely. ### First: is your block a "relevant building"? Everything in Schedule 8 turns on that term. Section 117 applies > "for the purposes of sections 119 to 124 and Schedule 8" and defines it: > "'Relevant building' means a self-contained building, or self-contained part of a building, in England that contains at least two dwellings and— (a) is at least 11 metres high, or (b) has at least 5 storeys." Then read section 117(3), because it cuts straight across the blocks this site is written for. A relevant building > "does not include a self-contained building or self-contained part of a building— (a) in relation to which a right under Part 1 of the Landlord and Tenant Act 1987 (tenants' right of first refusal) or Part 3 of that Act (compulsory acquisition by tenants of landlord's interest) has been exercised, (b) in relation to which the right to collective enfranchisement (within the meaning of Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993) has been exercised, (c) if the freehold estate in the building or part of the building is leaseholder owned (within the meaning of regulations made by the Secretary of State), or (d) which is on commonhold land." That set matters more than it looks. If your block has been through [collective enfranchisement](/blog/collective-enfranchisement-guide/), or the leaseholders exercised a 1987 Act right, it is outside the definition — and Schedule 8 does not restrict your service charge at all. The protections were built for leaseholders facing a third-party landlord's remediation bill; where the leaseholders have already bought the building, Parliament left them out. The limb at (c) — a [freehold owned by the leaseholders](/blog/freehold-residents-management-company/) by some other route — depends on regulations made by the Secretary of State, so if that is your position, take advice on whether the exclusion bites rather than assuming it either way. If your block is under the height threshold, or falls in one of those exclusions, the rest of this section does not apply to you and the recovery question is the ordinary one: what the lease permits and what section 19 allows. ### If you are inside: what Schedule 8 stops you charging Schedule 8 then restricts what can be charged through the service charge. Two provisions do most of the work — and, this is the part most often got wrong, **they do not have the same scope.** On defects the landlord is responsible for, paragraph 2 covers every lease in the building. It opens > "This paragraph applies in relation to a lease of any premises in a relevant building." and provides: > "No service charge is payable under the lease in respect of a relevant measure relating to a relevant defect if a relevant landlord— (a) is responsible for the relevant defect, or (b) is associated with a person responsible for a relevant defect." Read that as it is written: "under the lease", not "under a qualifying lease". Paragraph 2 does not filter by grant date or by how many flats the leaseholder owns. On cladding, paragraph 8 is absolute but narrower in reach: > "No service charge is payable under a qualifying lease in respect of cladding remediation." That protection is confined to qualifying leases. So are the other main limits: the landlord contribution condition (paragraph 3), the low-value lease exemption (paragraph 4), the overall and annual caps (paragraphs 5 and 7), and legal and professional costs relating to a relevant defect (paragraph 9). Read that in the context of your service charge accounts and the implication is stark. A cost can be perfectly reasonable, properly consulted on under [Section 20](/blog/section-20-consultation-guide/), and correctly demanded — and still be irrecoverable, because Schedule 8 says it is not payable at all. Reasonableness under section 19 and payability under Schedule 8 are separate questions. ## Which leases are protected — and which protections that governs Section 119 defines a qualifying lease. It must be > "a long lease of a single dwelling in a relevant building" under which the tenant pays a service charge, and — the condition that does the filtering — the lease must have been > "granted before 14 February 2022" The leaseholder must also have met an ownership condition at that date: the dwelling was their only or principal home, or they owned no more than three UK dwellings in total including this one. The practical consequence for a director is uncomfortable but important: **within one block, some leases will be qualifying and some will not.** A flat bought by a landlord with a large portfolio may fall outside the qualifying-lease protections while the flat next door falls inside them. But keep the two scopes apart, because this is where a wrong demand gets made. The qualifying-lease test governs paragraphs 3, 4, 5, 7, 8 and 9 — the cladding protection among them. It does not govern paragraph 2. Where a relevant landlord is responsible for the defect, no service charge is payable in respect of it under *any* lease in the building, qualifying or not. Treating the whole of Schedule 8 as lease-by-lease is how directors end up demanding a sum from a non-qualifying leaseholder that paragraph 2 had already made unpayable. ## What to actually do 1. **Establish your height and storey count.** Once, properly. It decides two separate questions: whether the higher-risk regime applies (18 metres or 7 storeys) and whether the Schedule 8 protections apply at all (11 metres or 5 storeys). 2. **If you are over the higher-risk threshold, get advice on the accountable person question.** Do not assume it is the freeholder simply because they own the building — the repairing-obligation limb can put it on an RTM company. 3. **Before demanding anything remediation-related, work out whether you are a "relevant building".** Height first, then the section 117(3) exclusions — enfranchised and 1987 Act blocks are outside Schedule 8 entirely. This is the step that gets skipped. If you are inside it, a demand that Schedule 8 makes unpayable is not recoverable no matter how carefully you consulted. 4. **Know which of your leases qualify — and what that actually governs.** The 14 February 2022 grant date and the ownership conditions vary flat by flat, and they decide the cladding protection in paragraph 8. They do not decide paragraph 2, which applies to every lease in the building. Record the qualifying status in your leaseholder data rather than working it out under pressure. 5. **Do not fund remediation from the reserve fund on the assumption you can top it back up.** If the cost turns out to be unrecoverable under Schedule 8, you have spent money you cannot replace. Our guide to [reserve funds and sinking funds](/blog/reserve-fund-sinking-fund-leasehold/) covers how reserves should be protected. Building safety is one of the few areas where getting it wrong is expensive in both directions — under-recovering leaves the block short, and over-demanding creates a liability. When the sums are material, take advice before the demand goes out, not after a leaseholder challenges it. Building-safety duties land on top of everything a director already does, and the evidence trail matters as much as the work. LevyBoard is guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 consultation for major works — for people who did not sign up to become property managers. *Both regimes covered here — the higher-risk building duties and the Schedule 8 cost protections — apply to buildings in England only; a Welsh block is outside both. This is general information, not legal advice. Building safety liability and the Schedule 8 protections are technical and fact-specific — where remediation costs are in play, take advice from a solicitor specialising in building safety before demanding any sum through the service charge.* ## Sources - Building Safety Act 2022, section 65 — meaning of "higher-risk building" - Building Safety Act 2022, section 72 — meaning of "accountable person" - Building Safety Act 2022, section 117 — meaning of "relevant building" - Building Safety Act 2022, section 119 — meaning of "qualifying lease" - Building Safety Act 2022, Schedule 8 — remediation costs under qualifying leases etc - GOV.UK — Register a high-rise residential building - Commonhold and Leasehold Reform Act 2002, section 96 — management functions transferred on RTM ]]> https://levyboard.co.uk/blog/commonhold-explained-directors/ https://levyboard.co.uk/blog/commonhold-explained-directors/ Sat, 12 Sep 2026 00:00:00 GMT Commonhold is set to become the default for new flats. What it is, how it differs from RTM and share of freehold, and what it means for existing blocks. Commonhold and Leasehold Reform Act 2002 — the same Act that gave leaseholders the Right to Manage. Section 1(1) sets three conditions: > "Land is commonhold land if— (a) the freehold estate in the land is registered as a freehold estate in commonhold land, (b) the land is specified in the articles of association of a commonhold association as the land in relation to which the association is to exercise functions, and (c) a commonhold community statement makes provision for rights and duties of the commonhold association and unit-holders (whether or not the statement has come into force)." Two structures do the work. The **commonhold association** owns the common parts, and section 34 makes it > "a private company limited by guarantee" — the same corporate form most RMCs and every RTM company already uses. The **commonhold community statement** is the rulebook: it sets out the rights and duties of the association and the unit-holders, and it does the job a lease currently does. The thing to notice is that a commonhold association is not an exotic new entity. It is a company limited by guarantee, run by directors drawn from the owners, responsible for repairing, maintaining and insuring the common parts and for collecting money from owners to pay for it. If you already run an RMC, you already run something structurally similar. ## How it differs from what you have now | | Leasehold with RTM | Share of freehold | Commonhold | |---|---|---|---| | **What each flat owner holds** | A lease, wasting over time | A lease, plus a share in the freehold-owning company | The freehold of the unit, no lease | | **Who owns the common parts** | The freeholder | The company the leaseholders own | The commonhold association | | **Does the term run out?** | Yes — leases shorten | Yes — leases still shorten unless extended | No | | **Ground rent** | Payable under the lease unless a peppercorn | Usually extinguished in practice | None | | **Governing document** | The lease | The lease | Commonhold community statement | | **Who manages** | RTM company | The RMC | Commonhold association | The most consequential row is the third. Under leasehold — including share of freehold — the leases still shorten and eventually need extending, which is why [lease extension costs](/blog/lease-extension-cost-guide/) matter even in a block that owns its own freehold. Commonhold has no term, so it never has that problem. The row that matters most day-to-day, though, is the last one. Somebody still has to run the building. Commonhold removes the landlord; it does not remove the work. Our guide to [what block management actually involves](/blog/what-is-block-management/) applies just as much to a commonhold association as to an RMC. ## Where the reform has actually got to Two documents matter, and neither is law. The Commonhold White Paper, published in March 2025, says the new legal framework > "will be supplemented by a ban on the sale of new leasehold flats, so that commonhold becomes the default tenure" and, on conversion of existing blocks, that > "our reforms will make it easier to convert an existing leasehold building to commonhold." The White Paper is explicit that conversion is a choice, not a compulsion, noting that for existing leaseholders "it should be their choice." The draft Commonhold and Leasehold Reform Bill followed on **27 January 2026** and entered pre-legislative scrutiny before the Housing, Communities and Local Government Select Committee on **4 February 2026**. It is a draft. It has not completed its passage, and none of it is in force. Scrutiny stages move — check the Committee's own page for where it has got to before you rely on the position with directors. So the accurate position to give a leaseholder in 2026 is: commonhold exists in law today, the government intends to make it the default for new flats, the necessary legislation is at draft stage, and nothing about your existing lease has changed. ## What this means for your block **Nothing immediate.** Your leases are unaffected. Your service charge obligations, [Section 20 consultation](/blog/section-20-consultation-guide/) duties and Companies House filings are all exactly as they were. **Conversion is not a light undertaking.** Converting an existing leasehold block to commonhold requires the freehold first — which for most blocks means [collective enfranchisement](/blog/collective-enfranchisement-guide/) as a preliminary step. The White Paper describes enfranchisement as "the first crucial step." A block that has not bought its freehold is not close to commonhold, whatever the headlines suggest. **The management skill transfers.** This is the genuinely encouraging part. Directors who can budget a service charge, run a consultation, produce year-end accounts and hold an AGM already have the skill set a commonhold association needs. The reform changes the legal wrapper, not the job. **Be careful what you promise.** The single most useful thing a director can do right now is avoid over-stating the timetable. Leasehold reform has slipped repeatedly. "Commonhold is coming for new flats, the Bill is in draft, nothing has changed for us" is accurate and will not need retracting. ## The honest summary Commonhold fixes real problems: the wasting lease, the ground rent, the absentee freeholder with an interest in charging you as much as possible. It does not fix the problem most self-managed blocks actually have, which is that running a building is a substantial unpaid job and volunteers burn out doing it. Our guide to the [common problems facing residents management companies](/blog/residents-management-company-problems/) covers those, and none of them are cured by changing the tenure. If your block is well run today, it will be well run as a commonhold. If it is struggling with arrears, poor records and no reserve fund, commonhold will not fix that either. Leasehold today, commonhold perhaps later — either way somebody unpaid is collecting the money and keeping the records. LevyBoard is guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 consultation for major works — for people who did not sign up to become property managers. *This guide applies to England and Wales. Scottish and Northern Irish property law differs significantly. This is general information, not legal advice. The commonhold reform position is moving — the Bill was at draft stage when this was written, so check the current parliamentary status before relying on any timetable. For advice on a specific block, contact a solicitor specialising in leasehold law or the free service at the Leasehold Advisory Service (LEASE).* ## Sources - Commonhold and Leasehold Reform Act 2002, Part 1 — Commonhold - CLRA 2002, section 1 — commonhold land - CLRA 2002, section 34 — constitution of a commonhold association - GOV.UK — Commonhold White Paper (March 2025) - GOV.UK — Draft Commonhold and Leasehold Reform Bill - Leasehold Advisory Service (LEASE) ]]> https://levyboard.co.uk/blog/collective-enfranchisement-guide/ https://levyboard.co.uk/blog/collective-enfranchisement-guide/ Sat, 05 Sep 2026 00:00:00 GMT How leaseholders buy the freehold of their block: the three qualifying tests, and why the 25% commercial limit still applies to enfranchisement, not RTM. Section 3 of the Leasehold Reform, Housing and Urban Development Act 1993 requires that > "the total number of flats held by such tenants is not less than two-thirds of the total number of flats contained in the premises." "Such tenants" means qualifying tenants — broadly, holders of long leases. A block where a third or more of the flats are let on short tenancies or held by the freeholder can fall at this hurdle. **Test 2 — half must participate.** Section 13 governs the initial notice, and the participation threshold is that the number of participating flats > "is not less than one-half of the total number of flats so contained" Half is a real constraint in practice. Enfranchisement costs money per flat, and persuading half a block to commit funds simultaneously is usually harder than satisfying any of the legal tests. **Test 3 — the commercial floor area limit.** Section 4(1) excludes premises where the non-residential part > "exceeds 25 per cent. of the internal floor area of the premises (taken as a whole)." Note the figure: **25 per cent**. Not 50. ## The 25% / 50% trap — read this before you rely on anything else A great deal of current online material states that the commercial limit for buying your freehold rose to 50%. That is wrong, and the error is easy to make because a very similar change *did* happen — to a different right. - **Right to Manage:** section 49 of the Leasehold and Freehold Reform Act 2024 raised the non-residential limit to 50%, and it came into force on **3 March 2025**. Mixed-use blocks that could not claim RTM before often can now. - **Collective enfranchisement:** section 29 of the same Act would make the equivalent change, directing that in section 4(1)(b) of the 1993 Act, for "25 per cent." substitute "50%". The commencement note on that section reads: **"S. 29 not in force at Royal Assent, see s. 124(3)."** It has not been commenced. So as things stand, a block with 30% commercial floor space **can claim the Right to Manage but cannot collectively enfranchise**. Two rights, two thresholds, one commenced and one not. If that describes your building, RTM is the available route today. Our guides cover [how the Right to Manage works](/blog/right-to-manage-process/) and [what an RTM claim costs](/blog/right-to-manage-costs/). ## What the process looks like 1. **Establish qualification.** Count the flats, count the qualifying tenants, measure the commercial floor area. Get the floor-area figure from a surveyor if it is anywhere near the threshold — this is not a tape-measure job. 2. **Get leaseholders committed.** You need at least half the flats participating, and you need them committed in writing, because the costs are shared and someone dropping out mid-claim is disruptive. 3. **Form the nominee purchaser.** Usually a company limited by guarantee that will hold the freehold. This is the entity that becomes the landlord afterwards. 4. **Get a valuation.** A leasehold valuer prices the freehold. As with lease extension, the premium is valuation-dependent — see our guide to [lease extension costs](/blog/lease-extension-cost-guide/) for how the same valuation concepts work. 5. **Serve the initial notice** under section 13, with the proposed purchase price. 6. **Negotiate, or apply to the tribunal.** Terms and price are agreed, or determined by the First-tier Tribunal if they cannot be. 7. **Complete.** The freehold transfers to the nominee purchaser. Expect this to take months rather than weeks, and expect the negotiation on price to be the slow part. ## What changes the day after you complete This is the part leaseholders consistently underestimate. Buying the freehold does not end the management problem — it transfers the whole of it to you. Your new company is now the landlord. That means: - It sets and demands the service charge, and must do so validly — see the [service charge accounting guide](/blog/service-charge-accounting-guide/). - It must run [Section 20 consultation](/blog/section-20-consultation-guide/) before qualifying works, with the same £250-per-leaseholder trigger and the same consequences for getting it wrong. - It carries the insurance obligation — our guide to [buildings insurance for blocks of flats](/blog/buildings-insurance-block-of-flats/) covers what that involves. - It has Companies House obligations, and directors have the [full set of director duties](/blog/rmc-director-responsibilities/). - Any leaseholder who did not participate is now your leaseholder, paying service charges to a company owned by their neighbours. That relationship needs handling deliberately. The [freehold residents management company guide](/blog/freehold-residents-management-company/) covers the resulting structure, and the [common problems facing RMCs](/blog/residents-management-company-problems/) guide covers what tends to go wrong afterwards. Enfranchisement gives you control. Control is the thing that comes with the work attached. ## Quick qualification check - Two-thirds or more of the flats held by qualifying tenants — yes or no? - At least half the flats willing to participate and pay — yes or no? - Non-residential floor area 25% or less — yes or no? - Someone willing to be a director of the new company afterwards — yes or no? Four yeses and you have a claim worth taking to a solicitor. A no on the third question but a yes on a 50% measurement means RTM today, and enfranchisement if and when section 29 is commenced. Buying the freehold is the beginning of the management job, not the end of it. LevyBoard is guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 consultation for major works — for people who did not sign up to become property managers. *This guide applies to England and Wales. Scottish and Northern Irish property law differs significantly. This is general information, not legal advice. Enfranchisement claims are technical and the qualifying tests turn on facts about your specific building — instruct a solicitor specialising in leasehold enfranchisement, or start with the free service at the Leasehold Advisory Service (LEASE).* ## Sources - LRHUDA 1993, section 3 — premises to which the chapter applies (two-thirds test) - LRHUDA 1993, section 4 — premises excluded (25 per cent non-residential limit) - LRHUDA 1993, section 13 — initial notice (one-half participation threshold) - Leasehold and Freehold Reform Act 2024, section 29 — change of non-residential limit (not in force) - Leasehold and Freehold Reform Act 2024, section 49 — RTM non-residential limit (in force 3 March 2025) - Leasehold Advisory Service (LEASE) ]]> https://levyboard.co.uk/blog/lease-extension-cost-guide/ https://levyboard.co.uk/blog/lease-extension-cost-guide/ Sat, 29 Aug 2026 00:00:00 GMT What a statutory lease extension costs: the four parts of the bill, why the 80-year mark changes everything, and which 2024 reforms are not yet in force. Section 39 of the Leasehold Reform, Housing and Urban Development Act 1993 gives a qualifying tenant of a flat > "the right, exercisable subject to and in accordance with this Chapter, to acquire a new lease of the flat on payment of a premium determined in accordance with this Chapter." What you get is fixed by section 56: the landlord must grant > "a new lease of the flat at a peppercorn rent for a term expiring 90 years after the term date of the existing lease." So a flat with 72 years remaining becomes a flat with 162 years remaining, and the ground rent drops to a peppercorn for the whole of it. Ground rent disappearing is part of what you are buying, which is why the landlord's loss of that rent forms part of the price. Our guide to [ground rent in blocks](/blog/ground-rent-leasehold-blocks/) explains what a peppercorn rent means in practice. ## The four things you actually pay **1. The premium.** This is the negotiated or tribunal-determined price for the new lease, and it is the only component nobody can quote you in advance. Schedule 13 paragraph 2 builds it from three parts: > "the diminution in value of the landlord's interest in the tenant's flat as determined in accordance with paragraph 3" > > "the landlord's share of the marriage value as determined in accordance with paragraph 4" > > "any amount of compensation payable to the landlord under paragraph 5" In plain terms: what the landlord loses (the ground rent stream and the reversion — the value of getting the flat back at the end of the term), plus a share of the value the extension *creates*, plus compensation for any other loss. **2. Your solicitor.** Conveyancing and notice work on the statutory route. **3. Your valuer.** You need a surveyor experienced in leasehold valuation to produce the figure your notice is based on. Serving a notice with an unrealistic premium is the most common way claims go wrong. **4. The landlord's reasonable costs.** Under section 60, the tenant giving the notice > "shall be liable, to the extent that they have been incurred by any relevant person in pursuance of the notice, for the reasonable costs" — covering the landlord's investigation, valuation and grant of the new lease. "Reasonable" is the operative word; it is not a blank cheque, and it is capable of being challenged. The premium is valuation-dependent and varies enormously with lease length, flat value, ground rent and location. Anyone quoting you a single national figure is guessing. Get a valuation. ## Why 80 years is the number that matters Marriage value is the increase in the flat's value created by extending the lease. Schedule 13 paragraph 4(2A) is explicit: > "Where at the relevant date the unexpired term of the tenant's existing lease exceeds eighty years, the marriage value shall be taken to be nil." Above 80 years, that whole component drops out. Below 80 years, the landlord is entitled to a share of it, and the premium steps up noticeably — then keeps climbing as the term shortens. The practical consequence for anyone with a lease in the low 80s: the cost of waiting is not gradual. It is a cliff you cross on a specific date. If your lease is at 82 years and you are thinking about extending "in a few years," you are thinking about it too late. Directors can do leaseholders a genuine service here simply by knowing the remaining terms in the block. Leases in a block are often granted on the same day, which means a whole building can approach the 80-year mark together. ## What the 2024 Act changed — and what it did not This is where most of what you will read online is out of date or simply wrong, so be careful. **In force.** Section 27 of the Leasehold and Freehold Reform Act 2024 — "Removal of qualifying period before enfranchisement and extension claims" — removed the two-year ownership requirement. It came into force on **31 January 2025**. You no longer have to have owned the flat for two years before serving a notice; you can start on the day you complete. **Not in force.** The 2024 Act's headline changes to the *price* — abolishing marriage value and extending the statutory term to 990 years — are in the Act but require secondary legislation and have not been commenced. Until they are: - Marriage value still applies below 80 years. - The statutory extension is still 90 years, not 990. - Section 60 still makes you liable for the landlord's reasonable costs (the 2024 Act would omit section 60, but that change is not in force either). If you read that marriage value has been abolished, check the commencement position before acting on it. A leaseholder who delays a claim waiting for a reform that has not commenced can cross the 80-year threshold while waiting — and pay considerably more as a result. ## What directors should actually do Lease extension is a leaseholder's private transaction, not block business. But it touches your block in three ways worth being ready for: 1. **Know the lease terms in your block.** If a cluster of flats is approaching 80 years, say so at the AGM. Nobody thanks you for the warning they did not get. 2. **Expect notices.** Where your company holds the freehold, it *is* the landlord for these purposes, and a section 42 notice lands on you. That is a matter for the company's solicitor, not something to answer informally. Our guide to the [freehold residents management company structure](/blog/freehold-residents-management-company/) covers where that responsibility sits. 3. **Do not advise.** Point leaseholders at a leasehold valuer and a solicitor. Getting the premium wrong is expensive and the mistake tends to attach to whoever gave the number. Short leases also affect the block collectively: flats under 80 years are harder to mortgage, which slows sales, which makes service charge collection harder. It is worth caring about even when it is not your flat. Extending a lease is a one-off; running the block is every month. LevyBoard is guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 consultation for major works — for people who did not sign up to become property managers. *This guide applies to England and Wales. Scottish and Northern Irish property law differs significantly. This is general information, not legal advice — lease extension premiums are valuation-dependent and the reform position is moving, so check the current commencement status before relying on any figure here. For a specific lease, instruct a solicitor and a leasehold valuer, or start with the free service at the Leasehold Advisory Service (LEASE).* ## Sources - Leasehold Reform, Housing and Urban Development Act 1993, section 39 — right to acquire a new lease - LRHUDA 1993, section 56 — obligation to grant a new lease (90 years, peppercorn rent) - LRHUDA 1993, Schedule 13 — premium payable, including the 80-year marriage value rule - LRHUDA 1993, section 60 — costs incurred in pursuance of the notice - Leasehold and Freehold Reform Act 2024, section 27 — removal of the qualifying period (in force 31 January 2025) - Leasehold Advisory Service (LEASE) ]]> https://levyboard.co.uk/blog/ground-rent-leasehold-blocks/ https://levyboard.co.uk/blog/ground-rent-leasehold-blocks/ Sat, 22 Aug 2026 00:00:00 GMT Ground rent explained for RTM and RMC directors: who collects it, why it is not a service charge, and where the proposed £250 cap has actually got to. Section 18 of the Landlord and Tenant Act 1985 defines a service charge as an amount payable by a tenant of a dwelling as part of or in addition to the rent — > "(a) which is payable, directly or indirectly, for services, repairs, maintenance, improvements or insurance or the landlord's costs of management, and (b) the whole or part of which varies or may vary according to the relevant costs." Ground rent fails both limbs. It buys no services, and it does not vary with what anything actually cost — it is whatever the lease says it is. The consequences matter to you as a director: - **The service charge protections do not apply to ground rent.** The reasonableness test, the consultation requirements for major works, the 18-month rule — all of those attach to service charges. None of them constrain a ground rent that the lease validly reserves. - **It does not belong in your service charge accounts.** If ground rent passes through your company's hands at all, it is money collected on the freeholder's behalf, not block income. Mixing it into the service charge account is one of the more common presentation errors in self-managed block accounts. - **A leaseholder disputing ground rent is not disputing your charge.** Point them at the freeholder, not at you. Our [service charge accounting guide](/blog/service-charge-accounting-guide/) covers how the two should be presented separately. ## Who actually collects it after RTM This is the point most RTM directors get wrong in their first year. Acquiring the Right to Manage transfers *management functions* to your company — not the freehold, and not the landlord's income streams. Section 96 of the Commonhold and Leasehold Reform Act 2002 defines those functions as functions with respect to: > "services, repairs, maintenance, improvements, insurance and management" Collecting ground rent is not on that list. The freeholder keeps the reversion and keeps the right to the ground rent, and generally continues to demand it directly from each leaseholder. Your RTM company runs the building; the freeholder still owns it and still charges rent for the land under it. Two practical implications: 1. **Do not budget for ground rent income.** It is not yours. Our guide to [what the Right to Manage does and does not transfer](/blog/right-to-manage-process/) covers the wider boundary. 2. **Do not chase ground rent arrears.** Arrears of ground rent are a matter between the freeholder and the leaseholder. Your arrears process covers unpaid service charges only — see the [arrears recovery guide](/blog/service-charge-arrears-recovery-guide/) for what is in scope. Where a block has bought its freehold, the position flips: the company *is* the landlord and does hold the right to any ground rent reserved by the leases. The [freehold residents management company guide](/blog/freehold-residents-management-company/) explains that structure. ## What the 2022 Act changed — and what it did not The Leasehold Reform (Ground Rent) Act 2022 is narrower than most people assume. Section 4 sets the rule for a regulated lease: > "(2) The permitted rent is a peppercorn rent. (3) In this Act a 'peppercorn rent' means an annual rent of one peppercorn." A peppercorn rent means, in practice, nothing is payable. But it only bites on a *regulated lease*, and section 1 defines that as a lease which > "(a) it is a long lease of a single dwelling, (b) it is granted for a premium, (c) it is granted on or after the relevant commencement day, otherwise than in pursuance of a contract made before that day, and (d) when it is granted, it is not an excepted lease" Condition (c) is the one that matters. The Act came into force for most leases on **30 June 2022**, and for retirement housing on **1 April 2023**. It applies to leases granted on or after those dates — not to existing ones. So in a typical block: - Flats sold on new leases since 30 June 2022 pay a peppercorn. - Flats on leases granted before then pay whatever their lease reserved, which may be £50, £250, or a figure that doubles every ten or twenty-five years. - The same building can therefore contain leaseholders paying nothing and leaseholders paying several hundred pounds a year, for identical flats. If a leaseholder extends their lease under the statutory route, the extended term is granted at a peppercorn ground rent — which is one of the reasons lease extension is worth understanding even for directors who do not own an affected flat. ## Where the £250 cap has actually got to This is the question directors are being asked in 2026, and the honest answer is that it is not law yet. The government published the draft Commonhold and Leasehold Reform Bill on **27 January 2026**. Among its measures, the Bill would extend ground rent protection to existing leases by > "capping ground rents at £250 a year, changing to a peppercorn after 40 years" The Housing, Communities and Local Government Select Committee began pre-legislative scrutiny of the draft Bill on **4 February 2026**. What that means precisely: - It is a **draft** Bill. It has not completed its passage and none of it is in force. Scrutiny stages move — check the Committee's own page for where it has got to before you rely on the position with leaseholders. - The cap is a **ceiling on what can be charged**, not a reduction applied to everyone. A lease reserving £120 a year is unaffected by a £250 cap. - Commencement timing has not been fixed, and reported expectations have already moved more than once. The directors' takeaway is a boring one, and it is the right one: **do not tell leaseholders their ground rent is capped.** Tell them a cap is proposed, that it is in a draft Bill, and that nothing changes until it is enacted and commenced. Directors who over-promise on reform timetables spend the following year fielding complaints when the date slips. ## What to actually do as a director A short list, because there is genuinely not much for you to do here: 1. **Check your own leases.** Establish, once, what ground rent each flat's lease reserves and whether it escalates. Doubling clauses on older leases are the ones that cause problems on sale. 2. **Keep it out of the service charge account.** Separate line, separate treatment, separate demand. 3. **Confirm who demands it.** In most RTM blocks that is the freeholder or their agent, not you. Make sure leaseholders know where to send queries. 4. **Answer reform questions with the current position.** A £250 cap is proposed in a draft Bill; the peppercorn rule applies only to leases granted from 30 June 2022. 5. **Flag escalating rents to leaseholders early.** A leaseholder whose ground rent doubles in three years will want to know now, not at the point of sale. Ground rent is one of the few areas of block management where the right answer is usually "not our department." Knowing that clearly, and being able to point at the section that says so, saves a surprising amount of time. Ground rent is the freeholder's income; the service charge is the block's own money, and it is the half you have to account for. LevyBoard is guided block management software for volunteer directors — service charge accounting, arrears tracking, and Section 20 consultation for major works — for people who did not sign up to become property managers. *This guide applies to England and Wales. Scottish and Northern Irish property law differs significantly. This is general information, not legal advice — the reform position in particular is moving, so check the current status of the draft Bill before relying on it. For advice on a specific lease, contact a solicitor specialising in leasehold law or the free service at the Leasehold Advisory Service (LEASE).* ## Sources - Leasehold Reform (Ground Rent) Act 2022, section 4 — permitted rent: general rule - Leasehold Reform (Ground Rent) Act 2022, section 1 — regulated leases - SI 2022/694 — Leasehold Reform (Ground Rent) Act 2022 (Commencement) Regulations 2022 — general commencement 30 June 2022 - Leasehold Reform (Ground Rent) Act 2022, section 25 — retirement housing commencement no earlier than 1 April 2023 - Landlord and Tenant Act 1985, section 18 — meaning of "service charge" - Commonhold and Leasehold Reform Act 2002, section 96 — management functions under leases - GOV.UK — Draft Commonhold and Leasehold Reform Bill - Leasehold Advisory Service (LEASE) ]]> https://levyboard.co.uk/blog/service-charge-budget-planning/ https://levyboard.co.uk/blog/service-charge-budget-planning/ Sat, 15 Aug 2026 00:00:00 GMT How to build an annual service charge budget for your RTM company or RMC: what to include, how to set reserve contributions, and how to avoid shortfalls. Section 19 of the Landlord and Tenant Act 1985. If leaseholders believe a charge is unreasonable — because it includes costs that were not actually incurred, because it overestimates, or because costs from prior years weren't returned — they can challenge it at the First-tier Tribunal. On the other side, the 18-month rule (Section 20B) means that costs not demanded within 18 months of being incurred become irrecoverable. A budget that underestimates and forces you to demand additional funds after more than 18 months may leave you unable to recover the shortfall. A well-documented budget process is your best protection against both types of challenge. ## Step 1: Gather last year's actuals Before building next year's budget, start with what actually happened this year: - Total expenditure by category (insurance, maintenance, cleaning, utilities, management costs, professional fees, etc.) - What you collected and what you actually spent - Reserve fund opening and closing balance - Any planned works that didn't happen (and should be re-budgeted) - Any surprises (emergency repairs, one-off professional costs) that need explaining or budgeting forward If you don't have year-end accounts yet, use the best available estimate. Accurate actuals matter — they are your baseline. ## Step 2: List the coming year's predictable costs Go through every recurring cost and estimate next year's expenditure: ### Buildings insurance Last year's premium plus any increase notified by the insurer. If you haven't renewed yet, use last year's premium and add 5-10% as a contingency unless you have reason to believe rates are stable. See our guide on [buildings insurance for blocks of flats](/blog/buildings-insurance-block-of-flats/) for what to include and how to ensure adequate cover. ### Maintenance and repairs (routine) Recurring maintenance: grounds maintenance, cleaning (communal areas, windows), pest control, entry system maintenance, fire alarm testing, emergency lighting testing, communal heating servicing, lift maintenance contract (if applicable). Get updated contract values for the coming year. ### Fire safety and health and safety compliance Fire risk assessment (typically every 12-24 months depending on your risk assessment), fire alarm servicing (typically at least twice a year, depending on your risk assessment), emergency lighting testing (monthly and annual), asbestos survey (every 3 years if asbestos present, depending on your risk assessment), legionella risk assessment (every 2 years for simple systems, depending on your risk assessment), gas safety certificate for any communal gas installation. These are legal requirements, not optional extras. Exact intervals depend on the outcomes of your individual risk assessments. ### Utilities Communal electricity (lighting, entry systems, lifts), water and sewerage for communal areas, communal heating costs. For electricity, check whether your current tariff renews automatically or requires action. ### Management and professional costs If you use a managing agent, their fee (see [what agents typically charge](/blog/block-management-costs-comparison/)). If self-managing: accountant's fee for year-end accounts, Companies House confirmation statement (£50 digital / £110 paper — check current rates), any software subscriptions, bank charges. ### Contingency Include a contingency of 5-10% of the total budget for unexpected routine maintenance. This is not the reserve fund — it's a contingency within the service charge budget for unplanned routine costs. ## Step 3: List planned major works Major works (anything costing more than £250 per leaseholder) require Section 20 consultation before you can commit to the contract — but they still need to be in the budget. Common major works for a residential block: - External decoration (typically every 5-7 years) - Roof replacement or major repairs - Lift refurbishment - Window replacement - Heating system replacement If major works are planned for the coming year, include the full estimated cost in the budget. Start the Section 20 process early — the three-stage consultation process takes a minimum of two months. ## Step 4: Set the reserve fund contribution The reserve fund (sometimes called a sinking fund) is the amount collected each year to build a pot for future major works. The goal is to smooth the cost of large works over many years rather than making a single large demand when the roof needs replacing. A well-funded reserve means you can carry out major works without a levy or a large one-off demand to leaseholders. **How much to contribute each year?** There is no statutory minimum for reserve fund contributions — the right amount depends on the building's age, condition, and planned works programme. As a practical framework: 1. **Long-term maintenance plan**: list all major works items with estimated cost and likely replacement date. Your surveyor or block management adviser can produce a formal long-term maintenance plan (also called a dilapidations schedule or building survey). 2. **Current reserve fund balance**: what you already have. 3. **Annual contribution**: (Total of planned major costs over 10-20 years) ÷ (number of years until works) ÷ (number of flats), adjusted for the current reserve balance. If you don't have a formal long-term maintenance plan, a reasonable minimum contribution to a reserve fund is 10-20% of the annual maintenance budget, though this rule of thumb can leave funds significantly short for older or complex buildings. See our guide to [reserve funds and sinking funds](/blog/reserve-fund-sinking-fund-leasehold/) for a fuller explanation of how reserves should be structured. ## Step 5: Calculate individual contributions Once you have the total budget (routine costs + major works in progress + reserve fund contribution), divide it by the number of flats weighted by each leaseholder's percentage share. The lease specifies each leaseholder's proportion — typically expressed as a percentage or fraction of the total. Add up each leaseholder's share: - Leaseholder A's contribution = Total budget × Lease % for Flat A If you have 10 flats each at 10% and your total budget is £30,000, each leaseholder owes £3,000 for the year. In practice, lease percentages rarely add up to exactly 100% and may differ between ground floor and upper floor flats, or between flats and commercial units. Work from the lease — do not approximate. ## Step 6: Issue a valid service charge demand A service charge demand must include: - The landlord's (or management company's) name and address (required by section 47 of the Landlord and Tenant Act 1987; section 48 is a separate duty to give each leaseholder, by notice, an address in England and Wales for serving notices — see our [section 48 notice](/blog/section-48-notice-landlord-address/) guide) - A summary of leaseholders' rights (required under the Service Charges (Summary of Rights and Obligations, and Transitional Provision) (England) Regulations 2007) - The amount demanded and the period it covers If the name and address are missing, the service charge is treated as not due until you give them to the leaseholder by notice. If the summary of rights is missing, the leaseholder can withhold payment until you send it. Use our free [service charge demand generator](/tools/service-charge-demand-generator/) to see what a compliant demand looks like. ## Step 7: Communicate the budget to leaseholders Leaseholders who understand what they are paying for are less likely to dispute charges. Good practice is to circulate the budget breakdown before issuing demands: - One-page summary: total budget, split by category - Reserve fund: current balance, planned contribution, and any major works planned - Individual amounts: each leaseholder's share - Timing: when demands will be issued and when payment is due This is not legally required but is recommended by the RICS Service Charge Residential Management Code as best practice. ## Common budget planning mistakes **Carrying forward a prior year's deficit without notification**: if last year's actual expenditure exceeded collections, the shortfall must be demanded within 18 months of the costs being incurred. A deficit carried forward into next year's budget must be explicitly identified and demanded — not quietly absorbed. **Setting the budget too low to avoid complaints**: undercharging creates a worse problem the following year. If the reserve fund is underfunded and major works arrive, you may need a large special levy that leaseholders are entitled to challenge. **Forgetting one-off costs**: Companies House confirmation statement, fire risk assessment, a one-off survey or professional fee. These need to be in the budget. **Not having reserve fund support**: if your leases do not include a provision for a reserve fund, you may not be able to collect reserve contributions through the service charge. Check your leases before setting a reserve contribution — and consult a solicitor if the leases are unclear. ## Sources - Landlord and Tenant Act 1985, s.19 — limitation on service charges - Landlord and Tenant Act 1985, s.20 — Section 20 consultation requirement - Landlord and Tenant Act 1985, s.20B — 18-month rule - Landlord and Tenant Act 1987, s.47 — landlord's name and address in demands - Landlord and Tenant Act 1987, s.48 — notification of an address for service - Service Charges (Summary of Rights and Obligations, and Transitional Provision) (England) Regulations 2007 — summary of rights required with demands - RICS Service Charge Residential Management Code — best practice for service charges - LEASE — Service Charges guidance ]]> https://levyboard.co.uk/blog/rtm-rmc-agm-guide/ https://levyboard.co.uk/blog/rtm-rmc-agm-guide/ Sat, 08 Aug 2026 00:00:00 GMT How to run an AGM for an RTM company or RMC: what's required, what to cover, how to prepare, and how to take minutes that protect you legally. RTM Companies (Model Articles) (England) Regulations 2009. These do not in themselves mandate an AGM, but many blocks' bespoke Articles do. 2. **The Companies Act 2006** — under Section 336 of the Companies Act 2006, **public companies** must hold an AGM within six months of the end of each financial year. However, **private limited companies** (which RTM companies and RMCs almost always are) are not required by statute to hold an AGM unless their Articles say so. This means: check your Articles before assuming you must hold one, and check them to know what procedure to follow. Even if not strictly required, holding an AGM each year is good practice and may be required by your lease or Articles. ## What must the AGM cover? There is no statutory list for private companies, but a typical RTM/RMC AGM agenda covers: 1. **Approval of previous minutes** — confirm the minutes of the last AGM are a true record 2. **Directors' report** — brief summary of the year: maintenance carried out, any disputes, compliance matters 3. **Service charge accounts for the last year** — present the year-end accounts showing actual income and expenditure against budget 4. **Budget for the coming year** — proposed annual budget, contributions per flat, any planned major works 5. **Reserve fund update** — current balance, planned drawdowns, and longer-term funding position 6. **Election of directors** — if any directors are retiring by rotation or new directors are proposed 7. **Appointment of accountants or other advisers** (if applicable) 8. **Any other business** — leaseholder questions and general discussion If you are planning major works under Section 20, the AGM is a good forum to explain the consultation process — though the formal statutory consultation notices are separate from the AGM. ## Notice requirements Your Articles of Association will specify the minimum notice period for an AGM. Commonly this is 14 or 21 days' written notice to all members. The notice should include: - The date, time, and location of the meeting (or a link/dial-in if virtual) - The agenda - Any resolutions to be proposed - Proxy voting instructions (if your Articles allow proxy votes) Send notice to every member (leaseholder who is a member of the company). Check your register of members — it should be kept up to date when flats are sold and new leaseholders join. ## Quorum Your Articles will specify the quorum — the minimum number of members who must be present for decisions to be valid. A common quorum for small blocks is two members, or 20% of the members, whichever is fewer. If quorum is not reached: - The meeting cannot make binding decisions - The meeting can be adjourned to a later date - At the adjourned meeting, some Articles allow the quorum to be waived if attendance is still low Check your Articles — the quorum rule and the procedure on failure to meet quorum may differ from these defaults. ## Virtual and hybrid meetings Since 2020, many companies have used video conferencing for AGMs. Private limited companies in England and Wales can hold general meetings in any format — including fully virtual — if the Articles permit it or do not explicitly prohibit it. In practice, most small blocks find virtual meetings increase participation. If you use video conferencing, document in the minutes that the meeting was held via [platform], that all participating members were identified, and that there were no technical problems preventing participation. ## Taking good minutes Minutes of an AGM are a governance record — not a transcript, but a factual account of decisions made. Good minutes record: - Meeting date, time, and location (or format if virtual) - Names of those present and in what capacity (director, member, or both) - That quorum was met - Each agenda item, the discussion summary, and any resolution - For any resolution: the wording, who proposed and seconded it, how it was voted on, and the outcome - Any action points: who will do what and by when - The name of the person taking minutes and the director who will sign them **Sign the minutes** — the Companies Act requires that minutes of general meetings of a company be signed by the chair of the meeting (or by the chair of the next general meeting). This is the director who chaired the AGM, not whoever took the notes. Signed minutes are evidence of the proceedings under Section 356 of the Companies Act 2006. Keep minutes for at least ten years — consistent with the Companies Act's record-keeping requirements for company minutes (check the current text of the Act for the precise statutory period). ## What leaseholders can do with the minutes Leaseholders have a right to inspect the minutes of general meetings of a company of which they are a member — this flows from their membership and the company's legal obligations. Under Section 358 of the Companies Act 2006, the company must allow inspection of minutes within a reasonable period of a member's request (without charge) and must provide a copy if requested — check the current text of the Act for the prescribed time period. If you have been running an RMC for years without formal AGMs or proper minutes, now is the time to regularise this. The administrative cost is low; the legal exposure of not having done it is significant if a leaseholder or their solicitor challenges decisions made without proper authority. ## Common AGM problems — and how to handle them **Low turnout**: in small blocks, it's common for only 1-2 directors to be leaseholders who actually show up. Virtual meetings help, as does circulating draft minutes and accounts in advance so people don't feel they need to attend to understand what's happening. If quorum isn't reached, follow the adjournment procedure in your Articles. **Leaseholder disputes at the AGM**: the AGM is not a tribunal. A director can chair the meeting, stick to the agenda, and decline to allow the meeting to be derailed by a grievance that isn't on the agenda. Note the issue in AOB and agree to address it in writing afterwards. **Contested director elections**: follow your Articles precisely. If the Articles allow cumulative voting or have a specific tie-breaking procedure, apply it. Document the voting in the minutes with exact numbers. **Resolutions that failed**: record what was proposed, who proposed it, and that it was not carried. A failed resolution is as important to document as a passed one. ## After the AGM - Circulate draft minutes to all attendees for comment - Have the chair sign the final version within a reasonable time - File the signed minutes with the company's records - If any resolutions require filing at Companies House (e.g., change of articles, director appointments), file them within 14 days For director changes, you need to notify Companies House using form AP01 (appointment) or TM01 (termination), with date of appointment or termination. File within 14 days. This forms part of the broader Companies House compliance picture for RTM and RMC directors — see our [guide to RMC director responsibilities](/blog/rmc-director-responsibilities/) for the full picture. ## Sources - Companies Act 2006, s.336 — AGM requirement for public companies - Companies Act 2006, s.356 — minutes of general meetings - Companies Act 2006, s.358 — right to inspect and request copies of records - RTM Companies (Model Articles) (England) Regulations 2009 - Companies House — director appointments and company filings ]]> https://levyboard.co.uk/blog/leaseholder-rights-leasehold-reform/ https://levyboard.co.uk/blog/leaseholder-rights-leasehold-reform/ Sat, 01 Aug 2026 00:00:00 GMT Leaseholder rights in England and Wales: service charge challenges, lease extensions, collective enfranchisement, Right to Manage and the 2024 Act reforms. Section 21 of the Landlord and Tenant Act 1985, a leaseholder can request a written summary of the service charge costs for the previous 12 months (or the last accounting year). The landlord must provide this within one month of the request or within six months of the end of the accounting period, whichever is later. ⚠️ **Follow that link to the point-in-time version, not the default view.** The default `/section/21` page shows a *substituted* section 21, commenced only so far as it confers a regulation-making power — it contains neither "more than four dwellings" nor "qualified accountant". The text that remains in force is the 1996 point-in-time version linked above. Under Section 22, leaseholders can also inspect the accounts, receipts, and other documents supporting the service charge. Inspection must be made available within a reasonable time and must be free of charge. ### The right to challenge unreasonable charges Service charges must be "reasonable" under Section 19 of the Landlord and Tenant Act 1985. If you believe a charge is unreasonable — because the work was not done, the cost was inflated, or the quality was poor — you can apply to the First-tier Tribunal (Property Chamber) for a determination on whether the charge is payable. The tribunal can decide that a charge is not reasonable and that you are only liable for a reduced amount, or nothing at all. This right applies whether your block is managed by a professional agent, the landlord directly, or an RTM company. Our guide on [how to challenge a service charge at the FTT](/blog/challenge-service-charge-tribunal/) covers the full process. ### The right to withhold disputed charges (with care) Leaseholders cannot simply withhold service charges without a valid basis — doing so can lead to forfeiture proceedings on the lease (a serious remedy that terminates the lease). However, if a charge is disputed and you have applied to the tribunal, you are generally protected from forfeiture while the dispute is live. ### The right to correct demand information Under section 47 of the Landlord and Tenant Act 1987, a written demand must contain the landlord's name and address — plus an address in England and Wales for serving notices, if the landlord's own address is outside England and Wales. If it does not, the service charge (or administration charge) part of the demand is treated as not due until the landlord gives you that information by notice. Section 48 is a separate duty: the landlord must give you, by notice, an address in England and Wales at which you can serve notices on them, and until it does, rent, service charges and administration charges are treated as not due (see our guide to the [section 48 notice](/blog/section-48-notice-landlord-address/)). Both are procedural protections that can give leaseholders time to resolve disputes. ### The right to appoint a surveyor Section 84 of the Housing Act 1996 gives a recognised tenants' association the right to appoint a surveyor to advise on service charges — including inspecting managing agent documents. This right is available to recognised associations, not individual leaseholders. ## Lease extension rights ### The individual right to extend your lease Most long residential leaseholders have a statutory right to extend their lease by 90 years (added to the remaining term) at a peppercorn ground rent under the Leasehold Reform, Housing and Urban Development Act 1993 (Chapter 2). There is no minimum ownership period before you can exercise this right — the previous requirement to have owned the flat for two years was abolished by the Leasehold and Freehold Reform Act 2024 for claims made on or after 31 January 2025. You pay a premium to the landlord calculated on a statutory formula. The shorter your remaining lease, the higher the premium — and the step change comes at 80 years, below which marriage value enters the calculation. For how the premium, your own legal and valuation fees and the landlord's costs combine into the total bill, see our guide to [lease extension costs](/blog/lease-extension-cost-guide/). **What changed in 2025:** Section 27 of the Leasehold and Freehold Reform Act 2024 abolished the two-year ownership requirement from 31 January 2025. Leaseholders can now exercise lease extension rights from the date of purchase. The 2024 Act also proposes extending the standard extension term from 90 years to 990 years and abolishing ground rent on extension — but those provisions require secondary legislation and are not yet in force. ## Collective enfranchisement ### The right to buy the freehold collectively A qualifying group of leaseholders — typically two-thirds of the flats in the building — can club together to buy the freehold of their block under the Leasehold Reform, Housing and Urban Development Act 1993 (Chapter 1 — collective enfranchisement). This is called [collective enfranchisement](/blog/collective-enfranchisement-guide/), and our guide walks through the three qualifying tests in detail. The process requires: - At least two-thirds of the total flats to be qualifying leaseholders (leases over 21 years) - Participating leaseholders to represent at least half the total flats - No more than 25% of the building's floor area in non-residential use (note: the 2024 Act raises the RTM threshold to 50%, but the collective enfranchisement non-residential limit remains at 25% as of mid-2026) Unlike RTM, enfranchisement requires a premium payment to the landlord. The price is calculated using a statutory method and can be significant for valuable blocks. ## Right to Manage ### The right to take over management without buying the freehold Leaseholders can take over management of their block without needing to buy the freehold and without proving the landlord has failed. The Right to Manage (RTM) was introduced by Part 2 of the Commonhold and Leasehold Reform Act 2002. To qualify, the block must be self-contained, have at least two flats, and have no more than 50% of its floor area in non-residential use (raised from 25% on 3 March 2025 by the Leasehold and Freehold Reform Act 2024). Leaseholders of at least half the flats must join the RTM company to serve the claim notice. RTM transfers the management functions — [insurance](/blog/buildings-insurance-block-of-flats/), repairs, service charges, major works — to a company controlled by leaseholders. The landlord retains the freehold but loses day-to-day management control. See our dedicated guides on [how the Right to Manage works](/blog/right-to-manage-process/) and [what an RTM claim costs](/blog/right-to-manage-costs/). ## Insurance rights Under the Schedule to the Landlord and Tenant Act 1985 (given effect by section 30A), leaseholders have rights to request a written summary of the block's buildings insurance and to inspect the full policy. The Schedule's separate right to ask whether insurance from a landlord-nominated insurer is "unsatisfactory" (paragraph 8) applies only where the lease requires the leaseholder to insure with an insurer the landlord nominates or approves, which is not the usual arrangement in a block. Where the insurance is recovered through the service charge, a leaseholder who thinks the premium is too high can ask the First-tier Tribunal to decide what is payable under section 27A of the 1985 Act. In September 2023 the FCA confirmed rules for leasehold buildings insurance that came into force on 31 December 2023 (the date set in its policy statement PS23/14). Insurance firms must act in leaseholders' best interests, insurers must ensure their policies "provide fair value to leaseholders" and give information about the policy and its pricing, "including the detail of any commission paid", and the FCA said it "expects brokers to immediately stop paying commissions to third parties (including property managing agents and freeholders) where they do not have appropriate justification and evidence for doing so in line with our rules on fair value". These rules are already in effect. Further restrictions under section 59 of the Leasehold and Freehold Reform Act 2024, and a new duty under section 60 for landlords to give leaseholders specified information about the insurance, are not yet in force. ## Rights under the 2024 Act: what is already in force The Leasehold and Freehold Reform Act 2024 is being implemented in stages. As of mid-2026, the following provisions are already in force: | Provision | In force since | What it means | |-----------|---------------|----------------| | Section 27 — no two-year ownership rule | 31 January 2025 | Flat leaseholders can extend an individual lease, and house leaseholders can enfranchise, from day one of ownership. (Collective enfranchisement is unaffected by s.27 — that route carries no ownership-period requirement in any event.) | | Section 49 — RTM non-residential limit 25% → 50% | 3 March 2025 | More mixed-use blocks can now claim RTM | | Sections 87A-87B — RTM cost shift | 3 March 2025 | Leaseholders no longer pay the landlord's professional costs in uncontested RTM claims | The service charge transparency reforms (Part 4), insurance commission restrictions (s.59), the insurance information duty (s.60) and the 990-year lease extension term are all prospective — not yet in force. For a detailed breakdown of what is already in force versus what is pending secondary legislation, see our guide to the [Leasehold and Freehold Reform Act 2024](/blog/leasehold-freehold-reform-act-2024/). ## What leaseholders still cannot do Several rights remain limited or are not yet in force: - **[Ground rent](/blog/ground-rent-leasehold-blocks/)**: the 2024 Act proposes abolishing ground rent for existing leases, but this is not yet in force. Leaseholders in existing leases with a ground rent above a peppercorn must still pay it. - **Service charge transparency**: the new standardised demand format and annual report requirements are pending secondary legislation. - **[Commonhold](/blog/commonhold-explained-directors/)**: a wholesale conversion of leasehold to commonhold — a system where owners own the flat freehold and share the communal structure — is subject to a separate consultation process and is not yet available. ## Where to get free advice The Leasehold Advisory Service (LEASE) provides free, independent advice to residential leaseholders on service charge disputes, lease extensions, and RTM. It is funded by the government and is the primary free resource for leaseholders in England and Wales. ## Sources - Landlord and Tenant Act 1985, s.19 — limitation on service charges - Landlord and Tenant Act 1985, s.27A — liability to pay service charges: jurisdiction - Landlord and Tenant Act 1985, Schedule — rights of tenants with respect to insurance - Landlord and Tenant Act 1985, s.21 — request for summary of service charge costs - Leasehold Reform, Housing and Urban Development Act 1993 — collective enfranchisement and lease extension - Commonhold and Leasehold Reform Act 2002, Part 2, Chapter 1 — Right to Manage - Leasehold and Freehold Reform Act 2024 — full text and commencement status - FCA — FCA confirms leasehold buildings insurance reforms - FCA — PS23/14: Multi-occupancy building insurance, feedback to CP23/8 and final rules (September 2023) - First-tier Tribunal (Property Chamber) - Leasehold Advisory Service (LEASE) ]]> https://levyboard.co.uk/blog/right-to-manage-costs/ https://levyboard.co.uk/blog/right-to-manage-costs/ Sat, 25 Jul 2026 00:00:00 GMT The real costs of a Right to Manage claim: company formation, professional fees, tribunal costs, and 2024 Act changes. No premium to the landlord. Sections 87A and 87B of the 2002 Act (inserted by the Leasehold and Freehold Reform Act 2024) changed the default cost position — each party now bears its own costs unless a tribunal orders otherwise. This removed what had been a significant financial deterrent to RTM claims. ## What you do have to pay for ### Company formation You must incorporate an RTM company before you can serve the claim notice. This is a private company limited by guarantee, formed under the model articles specified in the RTM Companies (Model Articles) (England) Regulations 2009. Companies House charges: - **Online incorporation (digital or web)**: £100 - **Same-day electronic incorporation**: £156 - **Paper incorporation**: £124 In practice, most RTM companies are incorporated online for £100. Once incorporated, you must also file an **annual confirmation statement** (£50 digital / £110 paper — check current rates at Companies House). The company continues to exist and file with Companies House for as long as the RTM company manages the block. ### Professional advice for the claim The RTM claim process involves statutory notices with precise requirements. Getting the notice wrong — wrong building description, wrong qualifying tenant list, wrong acquisition date — can defeat a claim and expose you to costs from a failed application. Many groups use a solicitor or specialist RTM consultancy to: - Draft and serve the Notice of Invitation to Participate - Draft and serve the Claim Notice - Handle any counter-notice from the landlord - Manage the process to acquisition date Professional fees for a straightforward uncontested RTM claim in a small-to-medium block (12-30 flats) typically range from **£1,500 to £4,000** for the legal work, depending on complexity and who you use. Some specialist RTM services advertise fixed-fee packages at the lower end of this range. This is optional — there is no legal requirement to use a solicitor. Leaseholders who are confident with the statutory process can proceed without professional help. The free advice service at the Leasehold Advisory Service (LEASE) provides guidance and template notices. ### Tribunal fees (if the landlord disputes the claim) If the landlord serves a counter-notice disputing your entitlement to RTM, the RTM company must apply to the First-tier Tribunal (Property Chamber) within two months. Tribunal application fees depend on the application type; for RTM applications they are set under the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013. The application fee for a standard RTM determination application is **around £100 (check the current fee schedule at the time of application)**. You may also incur solicitor costs for the tribunal proceedings, but there is no loser-pays rule here. Section 87A(1) makes an RTM company and its members "not liable for any costs incurred by any other person in consequence of a claim notice", except as that section allows — and for the costs *of proceedings*, section 87A(5) defers to whatever power the tribunal has "under another enactment" rather than conferring one itself. In the First-tier Tribunal that power is rule 13 of those Rules, which allows a costs order only in limited cases, including where "a person has acted unreasonably in bringing, defending or conducting proceedings". So the tribunal has a discretion, but an award is not the default: if the claim succeeds, the landlord will normally bear their own costs. ### What you pay if the landlord wins the dispute If the tribunal finds in the landlord's favour (i.e., your building does not qualify for RTM, or there was a procedural defect), the RTM company will have its own solicitor costs to absorb, plus potentially the tribunal fee. If the company acted unreasonably in bringing or conducting the case, rule 13 of the Property Chamber Rules lets the tribunal order it to pay some of the landlord's costs of the proceedings. Section 87B is a separate and **narrower** power that does not reach proceedings costs at all: it applies to costs incurred *before* a claim notice is withdrawn or ceases to have effect, and expressly only where "the costs are incurred other than in connection with proceedings before a court or tribunal" — one of six conditions that must all be met, another being that the company acted unreasonably. In practice, costs orders against RTM claimants are uncommon when the claim was made in good faith. ## What a typical RTM claim costs per flat In a 12-flat block, the costs divide roughly as follows: | Item | Total | Per flat (12 units) | |------|-------|---------------------| | Company formation | £100 | £8 | | Professional fees (mid-range) | £2,500 | £208 | | Tribunal fee (if needed) | ~£100 | ~£8 | | **Total (uncontested, with solicitor)** | **~£2,600** | **~£217** | | **Total (contested, with solicitor)** | **~£3,600–6,100** | **~£300–508** | These are indicative figures. The professional fee varies most — a DIY claim would cost only the company formation fee. ## Ongoing costs after RTM Once you have RTM, your RTM company takes on the management functions. Ongoing annual costs include: - Companies House confirmation statement (~£50/year digital) - Annual accounts (if using an accountant — recommended even for small blocks) - Any management software or tools the company uses (see our comparison of [block management software options in the UK](/blog/block-management-software-uk/)) - Potential directors' and officers' (D&O) insurance — typically £150–400/year for a small block (and see [how buildings insurance works under RTM](/blog/buildings-insurance-block-of-flats/)) These are ordinary running costs, not RTM-specific — you would pay similar amounts running any small limited company. For the full picture of what RTM directors take on, see our guide to [RMC and RTM director responsibilities](/blog/rmc-director-responsibilities/) and [how the Right to Manage process works](/blog/right-to-manage-process/). ## Is RTM worth the cost? RTM makes financial sense in most cases where: - Your block currently pays for a managing agent through the service charge (replacing the agent with self-management or a cheaper agent directly saves money) - There are specific management failures you want to address that the current landlord will not fix - Leaseholders want more control over decisions about the building The cost to acquire RTM (typically £200–500 per flat for a professionally-assisted claim) is usually recovered within one to two years if you replace an external managing agent with self-management (our [managing agent fee calculator](/tools/managing-agent-fee-calculator/) compares the annual agent cost against self-management for your block). Even if you appoint a new managing agent, choosing your own agent directly typically costs less than what a landlord-appointed agent charges through the service charge. ## Sources - Commonhold and Leasehold Reform Act 2002, s.87A — costs of RTM claims (inserted by LFRA 2024) - RTM Companies (Model Articles) (England) Regulations 2009 - Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 - GOV.UK — Filing a confirmation statement with Companies House - LEASE — Right to Manage guidance - First-tier Tribunal (Property Chamber) ]]> https://levyboard.co.uk/blog/buildings-insurance-block-of-flats/ https://levyboard.co.uk/blog/buildings-insurance-block-of-flats/ Sat, 18 Jul 2026 00:00:00 GMT How buildings insurance works for blocks of flats, including under right to manage: who insures, what to cover, information rights and commissions. Section 96(2) provides that the management functions a landlord has under the leases "are instead functions of the RTM company", and section 96(5) defines management functions as "functions with respect to services, repairs, maintenance, improvements, insurance and management". From the acquisition date, the RTM company arranges the block policy and recovers the premium through the service charge. **It insures on the leases' terms.** Because the RTM company takes over the landlord's function *under the lease*, it inherits the insurance covenant as written: the risks the lease requires to be covered, any requirement to insure for full reinstatement value, and any rules about the insurer. Read the insurance clause in every lease before placing cover. **The freeholder steps back — with one exception.** Section 97(2) provides that the landlord "is not entitled to do anything which the RTM company is required or empowered to do under the lease by virtue of section 96, except in accordance with an agreement made by him and the RTM company". But section 97(3) adds: "subsection (2) does not prevent any person from insuring the whole or any part of the premises at his own expense". A freeholder may keep its own cover if it wishes — at its own expense, not through the service charge. **Leaseholders' insurance rights now run against the RTM company.** The tenants' rights to information about the insurance (below) are applied to the RTM company by Schedule 7, paragraph 5(2) of the 2002 Act: "References to the landlord are to the RTM company." When a leaseholder asks for the policy summary, it is the RTM company's job to provide it, within the statutory time limit. **Plan the handover.** The outgoing landlord's policy may run beyond the acquisition date. Agree in advance when the RTM company's own policy will start, make sure there is no gap in cover, and make sure the rebuild value is checked rather than copied across. **Think about the directors too.** Insurance for the building is not insurance for the board. Ask your broker about directors' and officers' (D&O) liability cover for the volunteer directors alongside the buildings policy. ## What buildings insurance for a block should cover A standard block buildings policy covers the structure — everything in the building that is not owned by an individual leaseholder under the terms of their lease. This typically includes: - **External walls, roof, and foundations** - **Common parts** — hallways, staircases, communal gardens, car parks, bin stores, plant rooms - **Communal services** — communal heating systems, lifts, entry systems - **Fixtures and fittings within individual flats that form part of the structure** — this depends on the lease wording, so check what each lease includes in the demise Most standard block policies also include, or can include: - **Property owner's liability** — covers the company if someone is injured in the building or on the premises and makes a claim against it - **Employers' liability** — an employer carrying on business in Great Britain must generally hold it under the Employers' Liability (Compulsory Insurance) Act 1969, so check it is in place if the company employs anyone directly, such as a caretaker or cleaner - **Loss of rent or alternative accommodation** — if a flat becomes uninhabitable after an insured event - **Trace and access** — covers the cost of finding the source of a leak or other damage ## The rebuild value: why getting it right matters You should insure the block for its **rebuild value**, not its market value. The rebuild value is what it would cost to demolish and reconstruct the building — this is usually significantly different from what you could sell the property for. Underinsuring is dangerous because many policies contain an **average** clause: if the sum insured is less than the true rebuild cost, a claim can be reduced in proportion. Insure for £2 million where the rebuild cost is £4 million, and a policy with an average clause might pay only half of a £100,000 roof claim. Check your policy wording for it. To get the rebuild value right: - Obtain a professional rebuilding cost assessment from a chartered surveyor, and repeat it periodically — more often after major works or if building costs move sharply. - Review the sum insured at every renewal. Building cost indices can indicate whether the figure needs adjusting between valuations. - As a rough cross-check only, the ABI's free rebuild cost tool gives general guidance on the rebuild cost of houses and some types of flats. A block needs a surveyor's figure. If you are uncertain, err on the side of a higher insured value. Overinsuring costs a little more premium; underinsuring can mean a large shortfall on a major claim. ## Your legal duties on insurance As an RTM or RMC director, your insurance obligations come from three places. **The leases**: most leases require the insuring party to maintain buildings insurance on specific terms — often naming the risks, the basis of cover or requirements about the insurer. Read your leases before placing cover. **Reasonableness**: the premium is recovered through the service charge, and under section 19 of the Landlord and Tenant Act 1985 costs count towards a service charge "only to the extent that they are reasonably incurred". A leaseholder who thinks the premium is too high can ask the First-tier Tribunal to decide what is payable under section 27A. That is why comparing the market at renewal, and recording that you did, matters. **The leaseholders' information rights**: section 30A of the 1985 Act gives effect to the Schedule to the Act, "which confers on tenants certain rights with respect to the insurance of their dwellings". In summary: - **A written summary on request.** Under paragraph 2 of the Schedule, a leaseholder who pays for insurance through the service charge may, by notice in writing, require a summary of the insurance. You must supply it within 21 days of receiving the notice, and it must include the insured amount, the name of the insurer and the risks covered — or you can supply a copy of the policy instead. - **Inspection and copies.** Under paragraph 3, the leaseholder may require reasonable facilities to inspect the policy and associated documents (such as evidence that premiums were paid), or copies of them, again within 21 days. Inspection must be free of charge. - **It is an offence to ignore it.** Paragraph 6 makes it a summary offence to fail, without reasonable excuse, to perform these duties. - **Leaseholders can notify a claim.** Paragraph 7 lets a leaseholder notify the insurer of possible damage within the policy's claim-notification period. There is also a separate right in paragraph 8 to challenge a landlord's choice of insurer — but it applies only where a lease requires the *tenant* to insure with an insurer the landlord nominates or approves, which is not the usual arrangement in a block where the company insures the building. If remediation costs are in play, see our guide to the [Building Safety Act cost protections](/blog/building-safety-act-directors/). ## Insurance commissions: what the rules say now Insurance commissions — payments from insurers or brokers to managing agents or freeholders in connection with placing the block's insurance — have been a long-running issue in leasehold, because the premium that carries them is paid by leaseholders through the service charge. In September 2023 the FCA confirmed reforms under which, "from the new year", insurance firms would be required to "act in leaseholders' best interests" and would be "banned from recommending an insurance policy based on commission or remuneration levels". It added that insurers must ensure their policies "provide fair value to leaseholders" and provide information about the policy and its pricing, "including the detail of any commission paid", and that it "expects brokers to immediately stop paying commissions to third parties (including property managing agents and freeholders) where they do not have appropriate justification and evidence for doing so in line with our rules on fair value". For RTM companies and RMCs arranging their own insurance directly through a broker, the practical point is simple: ask the broker to set out in writing what it is paid, and by whom, and keep that with your renewal records. The Leasehold and Freehold Reform Act 2024, section 59, will go further. It inserts a new section 20G into the 1985 Act under which "excluded insurance costs" — costs attributable to payments made to arrange or manage insurance, such as commissions or remuneration, that are not a "permitted insurance payment" as defined in regulations — cannot be recovered through a variable service charge. legislation.gov.uk shows section 59 as prospective, not yet in force. See our guide to the [Leasehold and Freehold Reform Act 2024](/blog/leasehold-freehold-reform-act-2024/) for which provisions are already in effect and what is still pending. ## Shopping for block insurance When choosing a block policy: 1. **Use a specialist block insurance broker** — ordinary home insurance brokers often cannot access the block insurance market. A specialist broker compares policies across multiple insurers. 2. **Read the policy wording carefully**, not just the summary. Look for exclusions around escape of water and subsidence, the average clause, and whether trace and access cover is included. 3. **Agree the sum insured before placing cover** — have the rebuild value assessed. 4. **Get more than one quote** — prices for comparable cover can differ. 5. **Review annually** — a policy that was competitive three years ago may not be today. ## What to do if a leaseholder disputes the insurance If a leaseholder believes the buildings insurance is inadequate, too expensive, or arranged with an undisclosed commission, they can: - Require the policy summary and inspect the policy and associated documents under paragraphs 2 and 3 of the Schedule to the 1985 Act - Apply to the First-tier Tribunal (Property Chamber) under section 27A for a determination of whether the insurance element of the service charge is payable, and in what amount As a director, the best protection against a challenge is to document your insurance decisions: that you obtained comparative quotes, that you updated the rebuild value, and that you chose the policy in the interests of the leaseholders as a group. Good record-keeping on insurance decisions forms part of the broader compliance picture for RTM and RMC directors — see our guide to [RMC and RTM director responsibilities](/blog/rmc-director-responsibilities/) for the full picture. ## Frequently asked questions ### Does the RTM company have to insure the building? If the leases put the insurance obligation on the landlord, that function becomes the RTM company's on the acquisition date under section 96 of the 2002 Act, and it must insure on the leases' terms. ### Can the freeholder still insure the building after right to manage? It cannot exercise the RTM company's insurance function except by agreement (section 97(2)), but section 97(3) allows anyone to insure "at his own expense". It cannot pass that cost to leaseholders through the service charge. ### Who do leaseholders ask for the insurance details after right to manage? The RTM company. Schedule 7, paragraph 5 applies the 1985 Act's insurance-information rights to it, with a 21-day deadline to respond. ## Sources - Commonhold and Leasehold Reform Act 2002, s.96 — management functions transferred by RTM (including insurance) - Commonhold and Leasehold Reform Act 2002, s.97 — management functions: supplementary - Commonhold and Leasehold Reform Act 2002, Schedule 7, paragraph 5 — insurance information under RTM - Landlord and Tenant Act 1985, s.30A and Schedule — insurance information rights - Landlord and Tenant Act 1985, s.19 — reasonableness - Landlord and Tenant Act 1985, s.27A — liability to pay service charges - Employers' Liability (Compulsory Insurance) Act 1969, s.1 - Leasehold and Freehold Reform Act 2024, s.59 — insurance costs (prospective) - ABI — rebuild cost tool - FCA — Leaseholder buildings insurance - FCA — FCA confirms leasehold buildings insurance reforms (29 September 2023) - First-tier Tribunal (Property Chamber) ]]> https://levyboard.co.uk/blog/leasehold-freehold-reform-act-2024/ https://levyboard.co.uk/blog/leasehold-freehold-reform-act-2024/ Sat, 11 Jul 2026 00:00:00 GMT Which parts of the Leasehold and Freehold Reform Act 2024 are in force, which are coming, and what each change means for RTM and RMC directors. confirmed reforms in September 2023 that came into force on 31 December 2023 (the date set in its policy statement PS23/14): insurance firms must act in leaseholders' best interests, insurers must ensure their policies "provide fair value to leaseholders" and disclose information about the policy and its pricing, "including the detail of any commission paid", and the FCA said it "expects brokers to immediately stop paying commissions to third parties (including property managing agents and freeholders) where they do not have appropriate justification and evidence for doing so in line with our rules on fair value". Those FCA rules are already in effect and do not require a commencement order. The legislative restrictions under the 2024 Act are an additional layer, not yet in force. ### Extended lease terms The Act would change the standard lease extension term from 90 years to 990 years, and reduce ground rent to a peppercorn on extension. These provisions require secondary legislation setting the valuation method — not yet in place. ### Ground rent restrictions and the Commonhold Bill A separate draft Commonhold and Leasehold Reform Bill, published in January 2026, proposed banning new leasehold flats and introducing a ground rent cap. This is still at the consultation and legislative drafting stage — it is not yet law. ## What this means for RTM directors in practice Running an RTM company or RMC does not change materially from the already-in-force provisions, except on two points: **1. If your block never qualified for RTM before:** Check the non-residential threshold again. If your building's commercial floor space is between 25% and 50% of the total, RTM is now available. See our guide on [how the Right to Manage process works](/blog/right-to-manage-process/) and the [costs involved in making a claim](/blog/right-to-manage-costs/). **2. If you are running an existing RTM company:** Your obligations under the Landlord and Tenant Act 1985 — service charge demands, Section 20 consultation for major works, 18-month rule for cost recovery — are unchanged. The transparency reforms under the 2024 Act will add disclosure requirements when they are commenced, but you do not need to change what you do today. **3. On insurance:** Even before the legislative provisions come into force, the FCA rules mean your buildings insurer and any broker involved in placing your block's policy should be operating under fair-value requirements. Under the existing Schedule to the Landlord and Tenant Act 1985, leaseholders are entitled to request a summary of the insurance cover. A leaseholder who thinks the premium recovered through the service charge is too high can ask the First-tier Tribunal to decide what is payable under section 27A of the 1985 Act. Our guide on [buildings insurance for blocks of flats](/blog/buildings-insurance-block-of-flats/) covers this in detail. ## Staying current The 2024 Act is being implemented in stages. The most reliable way to track which provisions are in force is the version of the Act on legislation.gov.uk — the status column shows each section's commencement date or marks it as prospective. For RTM and RMC directors, the changes already in force are the meaningful ones today. The pending transparency and insurance reforms will create new disclosure obligations when they arrive — worth monitoring, not urgently preparing for. LevyBoard is designed for volunteer RTM and RMC directors — built around the obligations you have now, with updates as the reform programme progresses. *This guide covers provisions of the Leasehold and Freehold Reform Act 2024 affecting residential leasehold management in England and Wales. This is general information, not legal advice. The Act is being implemented over time — check legislation.gov.uk for current commencement status of specific provisions.* ## Sources - Leasehold and Freehold Reform Act 2024 — full text and commencement status - Section 49 — non-residential limit for Right to Manage - Section 59 — insurance costs (prospective) - Section 60 — duty to provide information about insurance to tenants (prospective) - FCA — PS23/14: Multi-occupancy building insurance, feedback to CP23/8 and final rules (September 2023) - GOV.UK — Right to Manage: a guide for landlords - House of Commons Library — Leasehold reform in England and Wales ]]> https://levyboard.co.uk/blog/reserve-fund-sinking-fund-leasehold/ https://levyboard.co.uk/blog/reserve-fund-sinking-fund-leasehold/ Sat, 04 Jul 2026 00:00:00 GMT What a reserve fund (sinking fund) is, why leasehold blocks need one, how to set the contribution, and the legal rules on holding the money on trust. Section 42 of the Landlord and Tenant Act 1987, sums paid by contributing tenants by way of service charges are **held on trust**: first, to meet the costs the service charges were payable for, and subject to that, on trust for the contributing leaseholders. In practical terms: - The money is **not** the RMC or RTM company's asset and must not be mixed with the company's own funds or used for anything outside the service charge purposes. - Keep it in a separate, clearly labelled service charge account, apart from any director's personal account. (A designated-account duty exists in section 42A but is not yet in force; separation is still the clearest way to show the trust is kept. The Act allows the money to be held as a single fund or in separate funds — what matters is that it is held on trust for the leaseholders, not absorbed into general company money.) - Interest earned on the fund forms part of the trust fund — it belongs to the leaseholders, not the company. - If a leaseholder sells their flat, they generally do not get their reserve contributions back — the fund stays with the building for the benefit of the leaseholders for the time being. This is normal and should be explained to sellers. Getting this wrong is a serious breach of trust and exposes volunteer directors personally. Keep the reserve in a clearly identified service charge account and account for it separately in the [year-end service charge accounts](/blog/service-charge-accounting-guide/). ## How the reserve appears in your accounts The reserve fund is shown in the service charge accounts, not the company's Companies House accounts (the two are separate documents). Each year the accounts should show the opening reserve balance, contributions received, any expenditure drawn from the reserve, interest earned, and the closing balance. Leaseholders are entitled to see this — transparency about the reserve is one of the strongest defences against disputes. ## Quick checklist - Check whether your lease requires, permits, or is silent on a reserve fund - Base the contribution on a forward maintenance plan, not a guess - Apportion the contribution using the lease service charge percentages - Hold the money on trust, in a separate service charge account - Never mix reserve funds with company or personal money - Treat interest earned as part of the fund (it belongs to leaseholders) - Account for the reserve separately and transparently each year - Still run a Section 20 consultation when spending it on qualifying works LevyBoard tracks the reserve fund alongside demands and expenditure for volunteer block directors, with every demand and cost designated to a fund, and each payment once it is matched to a demand — so the reserve fund is accounted for separately from the general fund and the audit trail is ready if a leaseholder asks. *This guide covers reserve and sinking funds for residential leasehold blocks in England and Wales. It is general information, not legal or financial advice. Reserve fund obligations depend on your specific lease — for the right contribution level or a complex lease, consult a surveyor or a solicitor specialising in leasehold law, or the free service at the Leasehold Advisory Service (LEASE).* ## Sources - Landlord and Tenant Act 1987, Section 42 — service charge contributions to be held on trust - GOV.UK — Leasehold property: service charges and other expenses - LEASE — Service Charges Guidance - RICS — Service Charge Residential Management Code ]]> https://levyboard.co.uk/blog/challenge-service-charge-tribunal/ https://levyboard.co.uk/blog/challenge-service-charge-tribunal/ Sat, 27 Jun 2026 00:00:00 GMT Disputing an unreasonable service charge: the Section 27A tribunal route, the reasonableness test, what counts as agreement, and how to apply. Section 27A of the Landlord and Tenant Act 1985. You do not need a solicitor, the tribunal is designed to be used by leaseholders directly, and in most cases the fees are modest. This guide explains when you can challenge, what the tribunal can and cannot decide, what stops you, and how to apply. This applies to England. It is general guidance, not legal advice — see the disclaimer at the end. ## When can you challenge a service charge? You can ask the tribunal to decide whether a service charge is payable in three broad situations: - **The charge is unreasonable.** Section 19 of the Landlord and Tenant Act 1985 limits what landlords (and RTM or RMC companies acting as landlord) can recover: costs are only payable "to the extent that they are reasonably incurred", and only where the works or services are of a reasonable standard. A charge that fails this test is not fully payable. - **The charge is not allowed by the lease.** The lease defines what can be charged as a service charge. If the landlord is recovering something the lease does not permit, it is not payable regardless of how reasonable the amount is. - **A procedural requirement was missed.** Some charges become irrecoverable if the landlord failed to follow a statutory process — for example, not running a [Section 20 consultation](/blog/section-20-consultation-guide/) before major works (which caps recovery at £250 per leaseholder), or breaching the [18-month rule](/blog/service-charge-18-month-rule/) for demanding costs. ## What the tribunal can decide Under Section 27A, the tribunal can determine: - **Whether a service charge is payable** at all - **The person by whom** it is payable - **The person to whom** it is payable - **The amount** that is payable - **The date** by which it is payable - **The manner** in which it is payable The reasonableness limit in Section 19 is applied when the tribunal decides the *amount* payable — so a charge that is excessive can be reduced to the amount the tribunal considers reasonably incurred. The tribunal can rule on charges already demanded and, importantly, on charges that have not yet been incurred — so you can get certainty before major works begin. ## What stops you challenging There is one key limit. Under Section 27A(4), you **cannot** ask the tribunal to decide a matter that has been **agreed or admitted** by the leaseholder, or that has already been determined by a court or tribunal, or settled by arbitration. But "agreement" has a specific meaning here. Section 27A(5) states that a leaseholder is **not** taken to have agreed or admitted a charge "by reason only of having made any payment". In plain terms: paying the charge — even paying it in full, even paying it for years — does not, on its own, count as agreeing it. You can pay under protest and still challenge later. What does bar a challenge is a genuine, explicit agreement (for instance, signing a settlement that records the amount as agreed). ## How to apply, step by step 1. **Raise it with the landlord or managing agent first.** Many disputes are resolved without the tribunal. Ask in writing for a breakdown of the charge, copies of invoices, and the relevant section of the lease. You have a statutory right to a written summary of costs and to inspect the supporting documents. Keep all correspondence. 2. **Check your lease.** Confirm what the lease actually allows to be charged, and how the [apportionment between flats](/blog/service-charge-apportionment/) is calculated. Most disputes turn on the lease wording. 3. **Gather your evidence.** Service charge demands, the accounts, invoices where you have them, photos of any sub-standard work, quotes showing the market rate for comparison, and your correspondence. 4. **Apply to the First-tier Tribunal (Property Chamber).** You complete the application form for a service charge determination and pay the application fee. Fees are modest and a hearing fee may also apply; fee remissions are available for those on low incomes or certain benefits. Apply via the First-tier Tribunal (Property Chamber). 5. **Prepare for the hearing.** The tribunal will set directions — deadlines for exchanging documents and statements. Follow them. The panel usually includes a lawyer and a surveyor, so they understand both the lease and the cost of building works. 6. **Get the determination.** The tribunal issues a written decision setting out what is and is not payable. If the landlord still does not comply, the decision can be enforced through the county court. ## If you are a director on the other side If you are a volunteer RMC or RTM director and a leaseholder challenges a charge you have demanded, the same rules apply to you. Your best protection is a clean paper trail: a clear annual [service charge budget](/blog/service-charge-accounting-guide/), compliant demands, completed Section 20 consultation where required, and year-end accounts that reconcile to actual spending. A well-documented charge that was reasonably incurred will stand up. For the wider picture of the disputes directors face, see [common problems facing residents management companies](/blog/residents-management-company-problems/). ## Quick checklist for leaseholders - Request a written breakdown and the supporting invoices from the landlord first - Check exactly what your lease permits to be charged - Remember: paying the charge does not stop you challenging it later - Confirm no statutory step was missed (Section 20 consultation, 18-month rule) - Apply to the First-tier Tribunal under Section 27A for a determination - Bring evidence — invoices, comparison quotes, photos, correspondence - Apply for a fee remission if you are eligible LevyBoard keeps a complete, demand-by-demand audit trail for volunteer block directors — budgets, consultations and records in one place — so a challenged charge can be defended with the paperwork to back it up. *This guide covers challenging residential leasehold service charges in England. It is general information, not legal advice. Tribunal procedure and time limits matter — for a significant or complex dispute, get advice from a solicitor specialising in leasehold law or the free service at the Leasehold Advisory Service (LEASE).* ## Sources - Landlord and Tenant Act 1985, Section 27A — liability to pay service charges: jurisdiction - Landlord and Tenant Act 1985, Section 19 — limitation of service charges: reasonableness - GOV.UK — Leasehold property: service charges and other expenses - First-tier Tribunal (Property Chamber) - LEASE — Service Charges Guidance ]]> https://levyboard.co.uk/blog/right-to-manage-process/ https://levyboard.co.uk/blog/right-to-manage-process/ Sat, 20 Jun 2026 00:00:00 GMT How the Right to Manage works for leaseholders: the qualifying criteria, the claim process step by step, the costs, and what changed in 2024. Commonhold and Leasehold Reform Act 2002 (Part 2, Chapter 1). It is a "no-fault" right: you do not need to show the landlord has mismanaged the building. If your block qualifies and you follow the process correctly, the landlord cannot refuse. Once acquired, RTM transfers the **management functions** under the leases to a Right to Manage company — repairs and maintenance of the structure and common parts, services, [insurance](/blog/buildings-insurance-block-of-flats/), and the management of service charges. It does **not** transfer ownership of the freehold, [ground rent](/blog/ground-rent-leasehold-blocks/), or the right to grant new leases. Those stay with the landlord. If you want to own the building outright, that is a separate process — [buying the freehold instead](/blog/collective-enfranchisement-guide/), called collective enfranchisement. The practical effect: your RTM company chooses the managing agent (or self-manages), sets the service charge budget, commissions the works, and runs the [Section 20 consultation](/blog/section-20-consultation-guide/) when major works are needed — for these purposes the RTM company is treated as the landlord, as our guide to [section 20 of the Landlord and Tenant Act 1985](/blog/landlord-tenant-act-1985-section-20/) explains. ## Who qualifies? The RTM criteria Three sets of conditions have to be met — the building, the leaseholders, and the leases. ### The building - It must be a **self-contained building**, or a self-contained part of a building that is structurally detached or vertically divided. - No more than **50% of the internal floor area** can be in non-residential use (shops, offices). This limit was raised from 25% to 50% on 3 March 2025 — more mixed-use blocks now qualify (see the 2024 reforms below). - The block must contain **at least two flats**. - Buildings where the landlord is a local authority, or which fall under certain exemptions, cannot use RTM. ### The leaseholders - At least **two-thirds of the flats** must be let to "qualifying tenants" — leaseholders whose original lease was granted for **more than 21 years**. - At the point you serve the claim notice, the RTM company's members must include qualifying tenants of at least **half the flats** in the building. So in a 12-flat block, you need at least 6 members who are qualifying tenants to make the claim. The more neighbours you get on board, the smoother the process and the running of the company afterwards. ### The leases Most long residential leases (over 21 years) qualify. Shared-ownership leases where the leaseholder does not own 100% can be more complicated — check the specific lease terms. ## How the RTM claim works, step by step The process is a sequence of statutory notices with fixed minimum time periods. Miss a step or use the wrong notice and the claim can be challenged. 1. **Form an RTM company.** This is a private company limited by guarantee, with model articles prescribed by regulations. Every qualifying tenant in the building is entitled to become a member. The company name usually ends "RTM Company Limited". You register it at Companies House like any other company. 2. **Invite all qualifying tenants to join.** Before serving the claim, the company must give a **Notice of Invitation to Participate** to every qualifying tenant who is not already a member. This gives non-members the chance to join before the claim is made. 3. **Serve the Claim Notice on the landlord.** The claim notice sets out the building, the members, and the proposed **acquisition date** — which must be at least three months after the "counter-notice date" (below). It must be given to the landlord, any management company named in the leases, and any other party with management responsibilities. 4. **Wait for the counter-notice.** The landlord has at least **one month** from the claim notice to serve a counter-notice, either admitting the claim or disputing that the company is entitled to acquire RTM. The landlord can only dispute on the limited statutory grounds — not because they would rather keep managing the block. 5. **Resolve any dispute.** If the landlord disputes entitlement, the RTM company must apply to the First-tier Tribunal (Property Chamber) within two months for a determination. If the tribunal finds in your favour (or no counter-notice is served), the claim succeeds. 6. **Acquire management on the acquisition date.** On the date stated in the claim notice (or as adjusted after any dispute), the management functions transfer to the RTM company. The landlord must hand over funds held on account, including any uncommitted service charge and reserve fund money. ## What RTM costs There is no premium to pay the landlord — RTM is not a purchase. The costs are practical: - **Company formation** — Companies House charges a small incorporation fee; budget for the registration and ongoing annual confirmation statement and accounts. - **Professional advice** — many groups use a solicitor or a specialist RTM service to draft and serve the notices correctly. This is the largest discretionary cost and is optional if you are confident with the process. - **Tribunal fees** — only if the landlord disputes the claim. Since 3 March 2025, in an **uncontested** claim the landlord can no longer recover its own costs from the RTM company or the participating leaseholders. Previously, leaseholders often had to pay the landlord's professional costs of dealing with the claim. New sections 87A and 87B of the 2002 Act now make each party responsible for its own costs unless a tribunal orders otherwise. This change makes RTM materially cheaper to pursue. ## What changed under the 2024 reforms The Leasehold and Freehold Reform Act 2024 made several changes to RTM. Two of them came into force on **3 March 2025**: - **The non-residential limit rose from 25% to 50%.** Section 49 amended the qualifying threshold so that buildings with up to half their floor area in commercial use can now claim RTM. Many mixed-use blocks (flats above shops) that were previously excluded now qualify. - **Leaseholders no longer pay the landlord's costs in uncontested claims** (sections 87A and 87B, described above). Other parts of the 2024 Act — including the wider service-charge transparency reforms — are **not yet in force**. The government ran a consultation on strengthening leaseholder protections that closed in September 2025 and has said it intends to bring further provisions into force through secondary legislation. Until the relevant commencement orders are made, those reforms do not apply, and any guidance you read should treat them as upcoming rather than current. Our guide to the [Leasehold and Freehold Reform Act 2024](/blog/leasehold-freehold-reform-act-2024/) tracks which provisions are live and which are still waiting on secondary legislation. ## After you acquire RTM: what you take on Acquiring RTM means you take on the same legal obligations the landlord had: - Setting an annual [service charge budget](/blog/service-charge-accounting-guide/) and issuing compliant demands. - Running [Section 20 consultation](/blog/section-20-consultation-guide/) before major works or long-term agreements. - Producing year-end service charge accounts and keeping a reserve fund if the leases require one. - Meeting Companies House obligations for the RTM company. These are the same day-to-day duties every volunteer director faces. For the full picture of what running a block involves, see our guide to [RMC and RTM director responsibilities](/blog/rmc-director-responsibilities/) and the [common problems self-managed blocks face](/blog/residents-management-company-problems/). ## Quick checklist - Confirm the building qualifies (self-contained, ≤50% non-residential, 2+ flats) - Confirm two-thirds of flats are held by qualifying tenants (leases over 21 years) - Recruit members — you need qualifying tenants of at least half the flats - Form the RTM company at Companies House with the prescribed articles - Serve the Notice of Invitation to Participate on non-member qualifying tenants - Serve the Claim Notice with an acquisition date at least three months ahead - Deal with any counter-notice; apply to the tribunal within two months if disputed - Take over management — and the funds held on account — on the acquisition date LevyBoard is software for volunteer directors running their block after acquiring RTM — service charge demands, deadline tracking, Section 20 workflows, and a full audit trail — so you can manage the block yourselves without a managing agent. *This guide covers the Right to Manage for residential leasehold flats in England and Wales. It is general information, not legal advice. The RTM claim process is technical and a single procedural error can defeat a claim — for a live claim, consider a solicitor or specialist RTM adviser, or the free advice service at the Leasehold Advisory Service (LEASE).* ## Sources - Commonhold and Leasehold Reform Act 2002, Part 2 — Right to Manage - Leasehold and Freehold Reform Act 2024, Section 49 — non-residential limit - GOV.UK — Right to Manage: a guide for landlords - LEASE — Right to Manage - First-tier Tribunal (Property Chamber) ]]> https://levyboard.co.uk/blog/section-20-requirements-checklist/ https://levyboard.co.uk/blog/section-20-requirements-checklist/ Sat, 13 Jun 2026 00:00:00 GMT A checklist of every Section 20 consultation requirement for RTM and RMC directors. Print it, pin it up, and check off each step as you go. Section 20 threshold) - Confirm these are "qualifying works" (building repair, maintenance, improvement, or renewal) — not a long-term qualifying agreement (which has different consultation requirements under Schedule 2 of the 2003 Regulations) - Identify every leaseholder who pays service charges and will contribute to the cost - Check whether a recognised tenants' association exists for the building (they have separate consultation rights) - Prepare a clear description of the proposed works and why they are necessary - Calculate your timeline — use the free [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/) to map every deadline from your target start date ## Stage 1: Notice of Intention **Purpose:** Inform leaseholders about the proposed works and invite observations and contractor nominations. **Requirements:** - Prepare a written Notice of Intention containing: - A general description of the proposed works - The reasons why the works are considered necessary - An invitation for leaseholders to make written observations within the consultation period - An invitation for leaseholders to nominate a contractor - The address to which observations and nominations should be sent - The date on which the relevant period ends (Schedule 4, Part 2, paragraph 1(2)(d)(iii) makes this a mandatory element) - Send the notice to every contributing leaseholder, individually, in writing - Send the notice to any recognised tenants' association - Keep proof of posting (certificate of posting or recorded delivery) for every notice sent - Work the deadline out correctly: regulation 2 defines "the relevant period" as "the period of 30 days beginning with the date of the notice" — the date of the notice is day 1, and the period is **not** measured from receipt - Date the notice the day you send it. Every day between dating and posting is a day of consultation the leaseholder never gets — and if you want to give leaseholders more than the statutory minimum, date and send the notice earlier rather than stating a later end date than the relevant period gives - Log every observation received, with the date received and the leaseholder's name - Log every contractor nomination received **After the 30-day period:** - Have regard to all observations received — genuinely consider them, even if you disagree - Prepare written responses to observations if any raised substantive points - If any leaseholder nominated a contractor, add them to your estimate list for Stage 2 (unless it is genuinely unreasonable — e.g., the contractor doesn't do that type of work) ## Stage 2: Statement of Estimates **Purpose:** Share the estimates you've obtained and invite further observations before choosing a contractor. **Requirements:** - Obtain at least **two written estimates** for the proposed works - If any leaseholder nominated a contractor in Stage 1, one of your estimates must be from that nominated contractor (where reasonably practicable) - Prepare a Statement of Estimates containing: - A summary of each estimate received (contractor name, price, key terms — but not necessarily the full detailed estimates) - A summary of all observations received during Stage 1 - Your responses to those observations - An invitation for leaseholders to make written observations on the estimates within the consultation period - The address to which observations should be sent - Where and when the full estimates can be inspected (you must make them available — typically at the company secretary's address, or by appointment) - The date on which the relevant period ends (Schedule 4, Part 2, paragraph 4(10)(c)(iii) — the same mandatory element as at Stage 1) - Send the Statement of Estimates to every contributing leaseholder, individually, in writing - Send the Statement of Estimates to any recognised tenants' association - Keep proof of posting for every statement sent - Make the full estimates available for inspection at the stated location during the stated period - Work the deadline from the Statement of Estimates' **own** date, not the Stage 1 notice date: 30 days beginning with the date of that notice - Log every observation received, with date and name **After the 30-day period:** - Have regard to all observations received - Prepare written responses to observations - Determine which contractor to appoint **Decision: does Stage 3 apply?** - If your chosen contractor submitted the lowest estimate → Stage 3 is **not required** - If your chosen contractor was nominated by a leaseholder → Stage 3 is **not required** - If your chosen contractor is neither the lowest nor leaseholder-nominated → Stage 3 **is required** within 21 days of entering into the contract ## Stage 3: Award Notification (if required) **Purpose:** Explain why you chose a contractor who was not the lowest bidder and not leaseholder-nominated. **Requirements:** - Prepare a written notice, given within 21 days of entering into the contract (Schedule 4, Part 2, paragraph 6), containing: - Which contractor you are appointing - The reasons for choosing this contractor over the lowest estimate or a leaseholder-nominated contractor - A summary of observations received during Stage 2 - Your responses to those observations - Send the notice to every contributing leaseholder - Send the notice to any recognised tenants' association - Keep proof of posting **Important:** The reasons must be genuine and specific. "We preferred this contractor" is insufficient. Valid reasons include: better warranty terms, relevant experience with similar buildings, insurance cover, completion timeline, quality of previous work. ## After consultation is complete - **Document everything.** Create a consultation file containing: all notices sent (with proof of posting), all observations received (with dates), all responses sent, all estimates, the decision rationale, and the final contract - **Keep the file for at least 6 years.** Leaseholders can challenge service charge reasonableness at the First-tier Tribunal years after the work is done. Your consultation file is your evidence - **Issue service charge demands** for the works — include the RMC's name and address on every demand ([section 47, Landlord and Tenant Act 1987](https://www.legislation.gov.uk/ukpga/1987/31/section/47)) and a summary of rights and obligations ([Section 21B](https://www.legislation.gov.uk/ukpga/1985/70/section/21B)) - **Remember the 18-month rule.** You must demand costs within 18 months of incurring them, or notify the leaseholder in writing within that period **both** that those costs had been incurred **and** that they would subsequently be required, under the terms of their lease, to contribute to them by the payment of a service charge. [Section 20B(2)](https://www.legislation.gov.uk/ukpga/1985/70/section/20B) is conjunctive: a note saying only that a demand will follow states the first limb and not the second, and does not preserve the charge. See our guide on [the 18-month rule](/blog/service-charge-18-month-rule/) ## Emergency and dispensation If the work is genuinely urgent (burst pipe, structural danger, fire safety risk), you can apply to the First-tier Tribunal for **dispensation** from consultation requirements under Section 20ZA. - Apply as early as possible — ideally before starting emergency work - The tribunal can grant dispensation retrospectively, but it is not automatic — see [what to do if you have already missed a stage](/blog/section-20-dispensation/) - Even in emergencies, inform leaseholders informally as soon as possible - Document why the work could not wait for full consultation ## Quick reference: minimum timelines | Step | Duration | |------|----------| | Stage 1 consultation period | 30 days minimum | | Obtaining estimates (between Stages 1 and 2) | 2-4 weeks typically | | Stage 2 consultation period | 30 days minimum | | Evaluation and decision (between Stages 2 and 3) | 1-2 weeks | | Stage 3 notification (if required) | Within 21 days of contract | | **Total minimum elapsed time** | **10-14 weeks** | For a personalised timeline with exact dates, use the free [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/). ## The legislation The requirements come from two sources: - Section 20 of the Landlord and Tenant Act 1985 — establishes the consultation requirement and the £250/leaseholder cap for non-compliance - Service Charges (Consultation Requirements) (England) Regulations 2003 — sets out the detailed procedural requirements (notice content, timelines, estimate requirements) in Schedule 4 Part 2 For a detailed guide to the Act itself, see our post on [Section 20 under the Landlord and Tenant Act 1985](/blog/landlord-tenant-act-1985-section-20/). LevyBoard provides guided Section 20 consultation workflows for major works — notices generated when you issue them, deadline alerts, observation tracking, and a complete audit trail — so each 30-day observation period is in front of you with its end date worked out. It does not work out the 21-day deadline for the Stage 3 notice, which runs from the date you enter into the contract, so diarise that yourself. The judgements the law puts on you — whether the works are qualifying, which schedule applies — stay yours, and for a complex or disputed consultation a solicitor is still the right call. *This checklist covers the Section 20 consultation process for qualifying works in England. This is general guidance, not legal advice — for complex or disputed consultations, consult a solicitor specialising in leasehold law.* ## Sources - Section 20, Landlord and Tenant Act 1985 — consultation requirements - Section 20ZA, Landlord and Tenant Act 1985 — dispensation from consultation - Section 21B, Landlord and Tenant Act 1985 — service charge demand requirements - Service Charges (Consultation Requirements) (England) Regulations 2003 — detailed procedural requirements - SI 2003/1987, regulation 2 — definition of "the relevant period" - SI 2003/1987, regulation 6 — the £250 consultation threshold - SI 2003/1987, Schedule 4, Part 2 — mandatory content of the notice of intention - First-tier Tribunal (Property Chamber) — tribunal for service charge disputes and dispensation applications ]]> https://levyboard.co.uk/blog/service-charge-accounts-format/ https://levyboard.co.uk/blog/service-charge-accounts-format/ Sat, 06 Jun 2026 00:00:00 GMT Example service charge accounts in the standard format for RTM and RMC directors: income and expenditure, reserve fund reporting, and formatting mistakes. RICS Service Charge Residential Management Code** — sets out the principles of transparency, timeliness, and reasonableness for service charge management - **ICAEW TECH 03/11** — provides detailed guidance and illustrative examples for residential service charge accounts Following these standards isn't legally mandatory, but the First-tier Tribunal expects accounts to meet them. If a leaseholder challenges your charges under Section 27A of the Landlord and Tenant Act 1985, clear and properly formatted accounts strengthen your position significantly. ## The three components of service charge accounts ### 1. Income and expenditure statement This is the core document. It shows what was collected, what was spent, and the difference. **Example — 8-flat block, accounting year ending 31 March 2026:** | Category | Budget | Actual | Variance | |----------|--------|--------|----------| | **Income** | | | | | Service charge contributions | £18,000 | £17,400 | (£600) | | Interest received | — | £45 | £45 | | **Total income** | **£18,000** | **£17,445** | **(£555)** | | | | | | | **Expenditure** | | | | | Buildings insurance | £3,200 | £3,450 | (£250) | | Communal cleaning | £2,400 | £2,400 | — | | Gardening and grounds | £1,200 | £1,080 | £120 | | Communal electricity | £960 | £1,020 | (£60) | | General repairs and maintenance | £2,500 | £2,870 | (£370) | | Fire safety (alarm servicing, risk assessment) | £800 | £650 | £150 | | D&O insurance | £350 | £350 | — | | Accountancy fees | £750 | £750 | — | | Companies House filing | £50 | £50 | — | | Contingency | £1,000 | — | £1,000 | | **Total operating expenditure** | **£13,173** | **£12,583** | **£590** | | | | | | | Reserve fund contribution | £4,827 | £4,827 | — | | **Total expenditure** | **£18,000** | **£17,410** | **£590** | | | | | | | **Surplus/(deficit) for the year** | | **£35** | | **Key points:** - Use income and expenditure, not profit and loss — service charges are not for profit - Show budget vs actual vs variance for every line item - The reserve fund contribution is shown as expenditure (it's money set aside, not available for current spending) - The surplus or deficit tells you whether you collected enough to cover costs - A small surplus is normal and healthy. A large surplus suggests overcharging. A deficit means you underspent the collection or had unbudgeted costs ### 2. Reserve fund (sinking fund) statement The reserve fund tracks money set aside for future major works. It must be reported separately. **Example:** | | Amount | |---|--------| | Opening balance (1 April 2025) | £22,350 | | Contributions during year | £4,827 | | Interest credited | £180 | | Expenditure from reserve | — | | **Closing balance (31 March 2026)** | **£27,357** | If major works were funded from the reserve during the year, list them: | Works | Amount | Date | |-------|--------|------| | Emergency roof repair (Flat 7 leak) | £3,200 | August 2025 | | Communal entry system replacement | £2,100 | November 2025 | | **Total reserve expenditure** | **£5,300** | | **Key points:** - A separate bank account for the reserve fund is strongly advisable, and is what the RICS code expects — but it is **not currently a statutory duty**. The designated-account requirement is section 42A of the Landlord and Tenant Act 1987, and it has never been generally commenced (its note reads "26.7.2002 for E. for specified purposes, 1.1.2003 for W. for specified purposes and otherwise prosp."). At minimum, ring-fence the money clearly. - What the law does require is a trust. Under Section 42 of the Landlord and Tenant Act 1987, reserve fund contributions are held on trust for the leaseholders — they cannot be used for the RMC's general purposes. Section 42(2) lets the money be held "either as a single fund or, if he thinks fit, in two or more separate funds", so a single fund is permitted - Show interest separately — it belongs to the fund, not the operating account - List any expenditure from the reserve with dates and descriptions ### 3. Notes to the accounts Notes provide context that the numbers alone don't convey: **Essential notes:** - **Accounting basis:** State which basis you use. The RICS Service Charge Residential Management Code recommends **accruals basis** (recording income when earned and expenditure when incurred, regardless of when money moves) — this gives a more accurate picture of each year's costs. However, many volunteer directors use **receipts and payments basis** (recording when money actually enters or leaves the bank) because it is simpler and maps directly to bank statements. Either basis is acceptable provided you state which you are using and apply it consistently. If in doubt, consult an accountant - **Accounting period:** "Year ended 31 March 2026" - **Arrears disclosure:** "Service charge arrears outstanding at the year-end totalled £600, relating to Flat 3 (£600 for Q4 2025/26). Recovery action has been initiated." See our [arrears recovery guide](/blog/service-charge-arrears-recovery-guide/) for the process - **Reserve fund policy:** "The RMC maintains a reserve fund to cover future major works. The current target balance is £40,000 based on a 10-year planned maintenance schedule" - **Significant variances:** Explain any line item where actual spend differed from budget by more than 10% — "Buildings insurance increased by £250 due to claims experience from the previous year's water damage" - **Post year-end events:** If something significant happened after the year-end that affects the accounts (e.g., a major claim, a large unexpected repair), note it ## Per-unit statements In addition to the block-level accounts, leaseholders are entitled to see their individual position. A per-unit statement shows: **Example — Flat 4 (18% lease percentage):** | Item | Flat 4 Share | |------|-------------| | Total operating expenditure | £2,264.94 | | Reserve fund contribution | £868.86 | | **Total charges** | **£3,133.80** | | Amounts demanded | £3,240.00 | | Amounts paid | £3,240.00 | | **Balance** | **£106.20 credit** | The credit arises because the flat's share of actual costs (£3,133.80) was less than the budgeted demands (£3,240.00). This is carried forward to the next year or offset against future demands. Use our free [Service Charge Demand Generator](/tools/service-charge-demand-generator/) to calculate per-unit shares from your lease percentages. ## Common formatting mistakes **1. Mixing service charge accounts with company accounts.** Your RMC files company accounts with Companies House separately. The service charge accounts are a different document — don't combine them. ICAEW TECH 03/11 is explicit about this: the service charge statement should be separate from the Companies Act accounts. **2. Not showing the reserve fund separately.** Lumping the reserve fund into the general income and expenditure makes it impossible for leaseholders to see how much is actually set aside for future works. This is the single most common cause of challenges at the tribunal. **3. Confusing accruals and receipts-and-payments basis.** Accruals accounting records income when earned and expenditure when incurred, regardless of when money moves. Receipts and payments (cash) accounting records when money actually enters or leaves the bank. The RICS code recommends accruals, but receipts and payments is acceptable for smaller blocks — the key is to state which basis you're using and apply it consistently year-on-year. **4. Missing the Section 21 summary.** Section 21 of the Landlord and Tenant Act 1985 gives leaseholders the right to request a summary of costs. If you produce clear accounts proactively, you'll rarely receive formal Section 21 requests — but be prepared for them. ⚠️ **Follow that link to the point-in-time version, not the default view.** The default `/section/21` page shows a *substituted* section 21, commenced only so far as it confers a regulation-making power — it contains neither "more than four dwellings" nor "qualified accountant". The text that remains in force is the 1996 point-in-time version linked above. **5. No comparatives.** Showing only the current year leaves leaseholders unable to see trends. Best practice is to show the current year alongside the previous year for comparison. ## When to use an accountant **Do it yourself if:** Your block has straightforward finances (no major works, no complex lease structures, no ongoing tribunal cases), and you're comfortable with the format above. **Use an accountant if:** You have active tribunal proceedings, complex reserve fund expenditure, mid-year director changes affecting the accounting period, or your lease specifically requires certified accounts. For blocks over 20 flats, an accountant review adds credibility. **What to expect to pay:** £500-800 for straightforward preparation of a small block's accounts. £1,000-1,500 if the accountant needs to reconstruct records from bank statements because no tracking was done during the year. The more organised your records, the lower the fee. LevyBoard keeps the records those accounts are built from. Every transaction is categorised and designated to the right fund as you go — general service charge or reserve — so at year end you have an income and expenditure statement by fund and a full period export. Your accountant still prepares the accounts your lease requires; they start from clean books instead of reconstructing a year from bank statements. *This guide covers service charge accounting for residential blocks in England and Wales. This is general guidance, not financial or legal advice — for complex accounting situations, consult a qualified accountant.* ## Sources - ICAEW — Accounting for service charges and service charge accounts — includes TECH 03/11 guidance - RICS Service Charge Residential Management Code — best practice standard - Section 21, Landlord and Tenant Act 1985 — right to request summary of costs - Section 27A, Landlord and Tenant Act 1985 — tribunal jurisdiction for service charge disputes - Section 42, Landlord and Tenant Act 1987 — service charge contributions held on trust ]]> https://levyboard.co.uk/blog/what-is-an-rmc/ https://levyboard.co.uk/blog/what-is-an-rmc/ Sat, 30 May 2026 00:00:00 GMT What a residents management company (RMC) is, how it differs from an RTM company, and what it means for you as a leaseholder, in plain English. Commonhold and Leasehold Reform Act 2002 | | **Why it exists** | Built into the lease from day one | Leaseholders wanted to take over management (often because they were unhappy with the freeholder or managing agent) | | **Freeholder's role** | Freeholder may or may not be involved — depends on the lease | Freeholder loses management functions but retains ownership of the freehold and the right to collect [ground rent](/blog/ground-rent-leasehold-blocks/) | | **Legal basis** | Contractual (written into the lease) | Statutory (created under the 2002 Act) | | **Company type** | Usually limited by shares or guarantee | Must be a company limited by guarantee | **In practice, the day-to-day work is identical.** Whether your company is an RMC or an RTM company, the directors still need to budget, collect service charges, chase arrears, manage contractors, comply with Section 20 for major works, and produce year-end accounts. Blocks held in commonhold are a third structure, run by [commonhold associations](/blog/commonhold-explained-directors/) rather than an RMC or RTM company. If your block does not yet have an RMC and you're considering claiming RTM, see our detailed guide to [the costs involved in an RTM claim](/blog/right-to-manage-costs/) — including company formation, professional fees, and what changed under the 2024 Act. ## What RMC membership means for you as a leaseholder ### You're a shareholder, not just a tenant As a shareholder, you have rights that ordinary tenants don't: - **Voting rights** — you can vote on major decisions at the AGM, elect directors, and influence how your building is run - **Access to information** — the RMC must share service charge accounts and make financial records available for inspection - **Right to challenge** — if you disagree with how service charges are being spent, you can challenge their reasonableness at the First-tier Tribunal (Property Chamber) Membership sits **alongside** your ordinary rights as a leaseholder, not instead of them. Being an RMC shareholder does not change your statutory right to a lease extension, nor [what extending a lease costs](/blog/lease-extension-cost-guide/) — that is a matter between you and whoever owns the freehold. ### You're also subject to obligations - **Service charge liability** — your lease specifies the percentage of total costs you're responsible for. The RMC issues demands and you must pay them. If you don't, the RMC can pursue arrears through the tribunal or courts. See our guide on [service charge arrears and the recovery process](/blog/service-charge-arrears-recovery-guide/) - **Share transfer on sale** — when you sell your flat, the RMC share must transfer to the buyer. Your solicitor handles this, but delays can hold up the sale if the RMC's records aren't up to date - **Potential director duty** — someone has to run the company. If nobody volunteers, the RMC can't function, which creates problems for everyone (see below) ## Common RMC issues ### Nobody wants to be a director This is the single most common problem for RMCs. The work is unpaid, time-consuming, and requires skills most leaseholders don't have — bookkeeping, contractor management, compliance with the Landlord and Tenant Act 1985, and Companies House administration. If no directors are appointed and the company doesn't file its confirmation statement, Companies House will eventually start strike-off proceedings. A struck-off RMC creates a serious legal mess — the company that's supposed to manage the building and hold insurance no longer exists, which can block property sales. For more on these challenges, see our guide to [common problems facing residents management companies](/blog/residents-management-company-problems/). ### The managing agent question Many RMCs appoint a professional managing agent to handle day-to-day operations. This costs £60-200+ per block per month but takes the workload off volunteer directors. The RMC board still makes major decisions and approves budgets — the agent handles execution. The alternative is full self-management, where directors do everything themselves. This is cheaper but requires more time and knowledge. Most small blocks (under 15 flats) that have taken over management do it themselves because [the agent's fee](/blog/block-management-costs-comparison/) is a significant proportion of the total service charge budget. ### Section 20 compliance If the RMC needs to carry out major works costing more than £250 per leaseholder, it must follow the Section 20 consultation process — a three-stage procedure with 30-day notice periods. Our [Section 20 consultation guide](/blog/section-20-consultation-guide/) and [step-by-step flowchart](/blog/section-20-consultation-flowchart/) cover this in detail. The free [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/) maps out every deadline. ## What to do if you've just joined an RMC **If you've just bought a flat in a block with an RMC:** 1. Check that your share has been transferred — ask the company secretary or your solicitor 2. Find out who the current directors are (search the company on the Companies House register) 3. Ask for a copy of the most recent service charge accounts 4. Attend the next AGM — or ask when one is scheduled **If you've been asked to become a director:** Read our [RMC director responsibilities guide](/blog/rmc-director-responsibilities/) before deciding. The role involves real legal obligations — directors of an RMC have the same duties as directors of any other company under the Companies Act 2006. LevyBoard is block management software for volunteer RMC and RTM directors — guided service charge accounting, arrears tracking, and compliance workflows, at £15 a month for a development of up to 15 flats. Free for 30 days, no card needed, and nothing is charged during the trial. To carry on after that, add a card before it ends. *This guide covers residents management companies in England and Wales. This is general guidance, not legal advice.* ## Sources - Commonhold and Leasehold Reform Act 2002, Part 2 Chapter 1 — Right to Manage provisions - Section 18, Landlord and Tenant Act 1985 — meaning of "service charge" - Section 20, Landlord and Tenant Act 1985 — consultation requirements for qualifying works - First-tier Tribunal (Property Chamber) — tribunal for service charge disputes - Companies House register — search for your RMC's details ]]> https://levyboard.co.uk/blog/section-20-consultation-flowchart/ https://levyboard.co.uk/blog/section-20-consultation-flowchart/ Sat, 23 May 2026 00:00:00 GMT A step-by-step flowchart of the Section 20 consultation process for RTM and RMC directors: all three stages, minimum timelines and common decision points. Section 20 of the Landlord and Tenant Act 1985 and the Service Charges (Consultation Requirements) (England) Regulations 2003. ## The three-stage process --- ### Stage 1: Notice of Intention **What you do:** Send a written notice to every leaseholder (and any recognised tenants' association) describing: - The proposed works and why they are necessary - The reasons you consider the works necessary - An invitation to nominate contractors - An invitation to make written observations within the consultation period **Format:** The notice must be in writing. Post or hand-deliver to each leaseholder's address (or their last known address if they've moved). Our notice guide sets out [what each stage's notice must contain](/blog/section-20-notice-templates/). **Minimum consultation period:** **30 days** from the date of the notice. **What leaseholders can do during this period:** - Make written observations about the proposed works - Nominate a contractor they want you to obtain an estimate from **Your obligation after the 30 days:** - You **must** have regard to any observations received - If a leaseholder nominated a contractor, you **must** try to obtain an estimate from the nominee. Where there are several nominations, Schedule 4, Part 2, paragraph 4 sets out whose to use — for example, where a single nomination is made by more than one leaseholder, the person who received the most nominations **Decision point:** Did any leaseholder nominate a contractor? - **Yes** → Try to obtain an estimate from the nominee as part of your estimate process (Stage 2). If you obtain one, it must be one of the estimates in your Statement of Estimates - **No** → Proceed to Stage 2 with your own selected contractors --- ### Stage 2: Estimates and the Statement of Estimates **What you do:** 1. Obtain estimates for the proposed works — the Statement of Estimates must set out at least **two**, and if you obtained an estimate from a leaseholder-nominated contractor, it must be one of them 2. Prepare a **Statement of Estimates** summarising the estimates received 3. Send the Statement of Estimates to every leaseholder, including: - A summary of each estimate (contractor name, amount, key terms) - A summary of any observations received during Stage 1 and your responses to them - An invitation to make written observations within the consultation period - Where estimates can be inspected (you must make the full estimates available) **Minimum consultation period:** **30 days** from the date of the Statement of Estimates. **What leaseholders can do during this period:** - Inspect the full estimates (you must provide access — typically at the company secretary's address or a convenient location) - Make written observations about the estimates **Your obligation after the 30 days:** - You **must** have regard to any observations received - If you want to appoint a contractor whose estimate is not the lowest and who was not nominated by a leaseholder, you must give written reasons within 21 days of entering into the contract **Decision point:** Is the contractor you want to appoint: - The lowest estimate? → No Stage 3 notice is needed — you can appoint them - A leaseholder-nominated contractor? → No Stage 3 notice is needed — you can appoint them - Neither? → You must issue a **Stage 3 notice** explaining your choice within 21 days of entering into the contract --- ### Stage 3: Award Notification (conditional) **When this stage applies:** Stage 3 is only required when you want to appoint a contractor who is: - Not the contractor who submitted the lowest estimate, AND - Not a contractor nominated by a leaseholder If your chosen contractor is the lowest bidder or was nominated by a leaseholder, you can skip Stage 3 and proceed to appoint them. **What you do:** Send a written notice to every leaseholder (and any recognised tenants' association) within 21 days of entering into the contract (Schedule 4, Part 2, paragraph 6), explaining: - Which contractor you have appointed - Why you chose them over the lowest estimate or leaseholder-nominated contractor - A summary of observations received during Stage 2 and your responses **Important:** There is no additional consultation period after Stage 3 — this is a notification, not a consultation. However, the reasons must be genuine. "We preferred them" is not sufficient. "Their estimate included a 10-year warranty on membrane works, which the cheaper estimate did not" is. --- ## Timeline summary Here's the minimum timeline for a full Section 20 consultation: | Stage | Action | Minimum Duration | |-------|--------|-----------------| | Pre-start | Identify the need for works, obtain initial scoping | Variable | | **Stage 1** | Notice of Intention sent to all leaseholders | **30 days** consultation | | Between stages | Obtain estimates (trying for one from a nominated contractor, if any) | 2-4 weeks typically | | **Stage 2** | Statement of Estimates sent to all leaseholders | **30 days** consultation | | Between stages | Evaluate estimates, consider observations | 1-2 weeks | | Post-consultation | Enter into the contract with your chosen contractor | Variable | | **Stage 3** | Award Notification (if required) | Within 21 days of entering into the contract | | Works | Works begin | Variable | **Minimum total: approximately 10-14 weeks** from the first notice to appointing a contractor. For complex works requiring multiple rounds of estimates, expect 4-6 months. Use our free [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/) to map out the exact dates for your consultation based on your planned start date. ## Common mistakes that void the consultation These errors mean you cannot recover costs above the £250/leaseholder cap: 1. **Sending notices by email only.** The regulations require written notice. Email may supplement postal notice but should not replace it unless every leaseholder has explicitly agreed to receive notices electronically. 2. **Getting the 30 days wrong.** Regulation 2 of the 2003 Regulations defines "the relevant period" as "the period of 30 days beginning with the date of the notice". The date of the notice is day 1. The period is **not** measured from receipt, and there is no postal-service extension in the Regulations. Date the notice the day you send it — every day between dating and posting is a day of consultation the leaseholder never gets. If you want to give leaseholders more than the statutory minimum, date and send the notice earlier; do not state an end date later than the relevant period gives, because Schedule 4, Part 2, paragraph 1(2)(d)(iii) makes "the date on which the relevant period ends" a mandatory element of the notice. 3. **Ignoring observations.** You must "have regard to" observations — meaning you must genuinely consider them and be able to demonstrate that you did. You don't have to agree with them, but you must respond. 4. **Not obtaining a nominated contractor's estimate.** If a leaseholder nominates a contractor, you must include their estimate unless it is genuinely unreasonable to do so (e.g., the contractor doesn't do that type of work, or refuses to quote). 5. **Skipping Stage 2 because the work is urgent.** Urgency does not exempt you from consultation — though you can apply to the First-tier Tribunal for dispensation under Section 20ZA if the situation genuinely cannot wait. 6. **Not keeping records.** If a leaseholder challenges the consultation at the FTT years later, your evidence is your protection. Keep copies of every notice, every observation received, every response sent, every estimate, and every decision rationale. ## Emergency works: dispensation from consultation If works are genuinely urgent — a burst pipe, a dangerous structural issue, an immediate fire safety risk — you can apply to the First-tier Tribunal (Property Chamber) for dispensation from consultation requirements under Section 20ZA. The tribunal will consider whether it is reasonable to dispense with all or part of the process. Dispensation is not automatic. The tribunal will look at: - How urgent the work actually was - Whether any consultation was possible (even an abbreviated process) - Whether leaseholders were informed, even informally - Whether leaseholders will suffer prejudice from the lack of consultation Apply as soon as possible — ideally before the emergency work begins, but the tribunal can grant dispensation retrospectively. ## Print this flowchart Keep a copy of this process visible when you're running a Section 20 consultation. The most common failures happen because directors lose track of which stage they're in or which deadlines apply. For a personalised timeline with specific dates for your consultation, use our free [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/). LevyBoard provides guided Section 20 consultation workflows for major works: each notice is generated from your details when you issue it, then dated and stored, and the 30-day observation period for the Notice of Intention and the Statement of Estimates is worked out from the date of each notice, so the stages are in front of you rather than tracked in your head. It does not work out the 21-day deadline for the Stage 3 notice, which runs from the date you enter into the contract, so diarise that yourself. *This guide covers the Section 20 consultation process for qualifying works in England. The Welsh consultation regulations are separate and are not covered here, and in relation to a dwelling in Wales the appropriate tribunal is a leasehold valuation tribunal rather than the First-tier Tribunal (Landlord and Tenant Act 1985, section 38). This is general guidance, not legal advice — for complex or disputed consultations, consult a solicitor specialising in leasehold law.* ## Sources - Section 20, Landlord and Tenant Act 1985 — limitation of service charges: consultation requirements - Section 20ZA, Landlord and Tenant Act 1985 — consultation requirements: supplementary - Service Charges (Consultation Requirements) (England) Regulations 2003 — detailed consultation procedures - SI 2003/1987, regulation 2 — definition of "the relevant period" - SI 2003/1987, regulation 6 — the £250 consultation threshold - Section 38, Landlord and Tenant Act 1985 — definition of "appropriate tribunal" (England / Wales) - First-tier Tribunal (Property Chamber) — tribunal for dispensation applications and service charge disputes ]]> https://levyboard.co.uk/blog/what-is-block-management/ https://levyboard.co.uk/blog/what-is-block-management/ Sat, 16 May 2026 00:00:00 GMT Block management explained for new RTM and RMC directors: what it covers, what you're responsible for, and how to manage without a managing agent. RICS Service Charge Residential Management Code sets out the recommended format. Our [service charge accounting guide](/blog/service-charge-accounting-guide/) walks through the full annual cycle. ### 2. Building maintenance You're responsible for keeping communal areas in good condition — hallways, stairwells, external walls, the roof, gardens, parking areas, and any shared equipment (lifts, entry systems, communal boilers). **Reactive maintenance** covers repairs: a broken light, a leaking pipe, a damaged door. You need a list of reliable contractors, and you need to get quotes, supervise work, and check it's done properly. **Planned maintenance** is the bigger challenge. Buildings need cyclical work — external decoration every 5-7 years, roof replacement every 25-40 years, lift refurbishment, window replacement. Planning (and saving) for these costs is what the reserve fund is for. **The Section 20 threshold.** Any maintenance work costing more than £250 per leaseholder triggers a mandatory consultation process under Section 20 of the Landlord and Tenant Act 1985. This is a three-stage process with minimum notice periods, and skipping it means you can only recover £250 per leaseholder regardless of the actual cost. Our [Section 20 consultation guide](/blog/section-20-consultation-guide/), our plain-English explainer of [section 20 of the Landlord and Tenant Act 1985](/blog/landlord-tenant-act-1985-section-20/) and the free [Timeline Calculator](/tools/section-20-timeline-calculator/) cover this in detail. ### 3. Legal and regulatory compliance Running a block involves specific legal obligations: - **Companies House filing.** Your RTM or RMC is a company limited by guarantee. You must file a confirmation statement annually (£50 online) and notify Companies House of director changes within 14 days. Miss the confirmation statement and Companies House will start the strike-off process — which freezes property sales in the block. - **Health and safety.** Fire risk assessments (legally required), emergency lighting tests, fire alarm servicing, legionella risk assessments for water systems, asbestos surveys for pre-2000 buildings. These aren't optional — they're legal requirements under the Regulatory Reform (Fire Safety) Order 2005 and other regulations. If your block is tall enough to fall within it, see our guide to the [Building Safety Act](/blog/building-safety-act-directors/). - **Insurance.** Buildings insurance is typically required by the leases — and the block must be insured for its rebuild value, not its market value. Directors should also consider directors' and officers' (D&O) liability insurance — it protects you personally if a decision you make as director leads to a claim. See our detailed guide on [buildings insurance for blocks of flats](/blog/buildings-insurance-block-of-flats/) for what to cover, how to set the rebuild value, and what leaseholders can challenge. - **Data protection.** If you hold leaseholder contact details, you're processing personal data under UK GDPR. For a small block this is straightforward, but you should have a basic privacy notice. ### 4. Communication and governance Leaseholders are both the customers and the shareholders of your management company. Keeping them informed prevents disputes: - **AGMs.** Annual general meetings give leaseholders a voice. Even if your lease doesn't strictly require one, holding an AGM builds trust and gives directors a mandate for major decisions. - **Budget transparency.** Circulate the annual budget with a clear breakdown by category before issuing demands. Leaseholders who understand what they're paying for are less likely to dispute charges. - **Works notifications.** When maintenance is planned, tell leaseholders what's happening, when, and how much it will cost. Surprises cause complaints. - **Dispute handling.** Leaseholders can challenge service charge reasonableness at the First-tier Tribunal (Property Chamber). Understanding this process — and keeping records that demonstrate your charges are reasonable — is your best protection. ### 5. Contractor and supplier management Unless a director happens to be a builder, you'll need external contractors for most maintenance work. Effective contractor management means: - Getting at least three quotes for any significant work - Checking insurance certificates (public liability, employers' liability) - Putting scope, price, and completion dates in writing - Inspecting work before final payment - Building relationships with reliable tradespeople — a good electrician, plumber, roofer, and decorator who know your building saves time on every job ## What block management is NOT **It's not property letting.** Block management is about maintaining the building and managing the service charge — not about finding tenants, setting rents, or handling tenancy agreements. If individual leaseholders rent out their flats, that's their responsibility (subject to any lease restrictions on subletting). **It's not optional.** If your RTM company has exercised the right to manage under the Commonhold and Leasehold Reform Act 2002, you are the manager. (If your block hasn't claimed yet, our guide to [how the Right to Manage works](/blog/right-to-manage-process/) covers the qualifying criteria and the notice process.) The legal obligations exist whether or not you have the time, training, or tools to handle them. **It's not one person's job.** Sustainable block management requires distributing tasks among directors. One person handling finances, maintenance, compliance, and communication will burn out — and when they resign, everything falls apart. See our guide on [RMC director responsibilities](/blog/rmc-director-responsibilities/) for how to split the workload. ## How volunteer directors actually manage blocks The honest answer: most volunteer directors cobble together spreadsheets, Word templates, shared folders, and a WhatsApp group. It works until it doesn't — until arrears pile up, a Section 20 consultation goes wrong, or year-end accounts need producing and nobody knows how. The gap between what professional managing agents use ([dedicated block management software](/blog/block-management-software-uk/), trained staff, established processes) and what volunteer directors have access to (nothing, essentially) is the core challenge of self-managed blocks. LevyBoard is built for exactly that gap: guided block management software for volunteer directors — service charge accounting, arrears tracking, Section 20 consultation for major works, and a fund-designated ledger that hands your accountant clean books at year end — for people who didn't sign up to become property managers. Free for 30 days, no card needed, and nothing is charged during the trial. To carry on after that, add a card before it ends. *This guide covers block management for residential leasehold properties in England and Wales. Scottish and Northern Irish property law differs significantly. This is general guidance, not legal advice.* ## Sources - Section 20, Landlord and Tenant Act 1985 — consultation requirements for qualifying works - Section 21B, Landlord and Tenant Act 1985 — service charge demand requirements - Commonhold and Leasehold Reform Act 2002, Part 2 Chapter 1 — Right to Manage provisions - Regulatory Reform (Fire Safety) Order 2005 — fire safety obligations - RICS Service Charge Residential Management Code — best practice for service charge accounting - First-tier Tribunal (Property Chamber) — tribunal for service charge disputes ]]> https://levyboard.co.uk/blog/service-charge-software-guide/ https://levyboard.co.uk/blog/service-charge-software-guide/ Sat, 09 May 2026 00:00:00 GMT When does service charge software make sense for RTM and RMC directors? What to look for, what to avoid, and how to decide if your block needs it. RICS Service Charge Residential Management Code - **Reserve fund tracking** — monitors the sinking fund balance and planned contributions - **Document storage** — centralises leases, insurance certificates, contractor quotes, and meeting minutes Some platforms also cover Section 20 consultation workflows, Companies House filing reminders, and resident communication portals. ## When a spreadsheet stops being enough A spreadsheet works when: - You have fewer than 6 units - All leaseholders pay on time - You don't need to produce formal year-end accounts - One director handles everything and has good Excel skills It starts failing when: - **Multiple arrears cases overlap** — tracking three leaseholders at different stages of the recovery process in a spreadsheet means missed deadlines and inconsistent letters - **Year-end accounts are due** — reconstructing 12 months of income, expenditure, and reserve fund movements from bank statements and a spreadsheet takes hours and produces errors. See our [service charge accounting guide](/blog/service-charge-accounting-guide/) for what compliant accounts require - **Directors change** — a new volunteer inherits a spreadsheet with no documentation, custom formulas, and naming conventions that made sense to someone else three years ago - **The AGM demands transparency** — leaseholders want clear breakdowns by category, per-unit statements, and explanations for budget variances. Generating these from a spreadsheet is painful - **You trigger Section 20** — major works consultation has statutory deadlines and document requirements. Tracking these alongside everything else in a spreadsheet is risky. Our free [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/) handles the timeline, but the overall workflow still needs coordination ## What to look for (and what to avoid) ### Must-haves for volunteer directors **Guided workflows, not just features.** Professional managing agents know what a compliant demand looks like. You probably don't. Software for volunteer directors should guide you through each task, explaining what's required and why — not assume you already know. **Lease percentage calculations.** Every block has a unique set of percentages defined in the leases. The software must handle unequal shares, not just divide by the number of flats. **Standard-format year-end accounts.** If the output isn't in the format recommended by RICS guidance, you'll still need an accountant to reformat it. **Affordable pricing.** A 12-flat block with an annual budget of £15,000-25,000 cannot justify £100-200/month on software. That's £1,200-2,400/year — a significant line item in the service charge budget. Look for pricing under £30/month per block. **No long-term contract.** Volunteer directors change. The next director might prefer a different approach. Monthly billing with no lock-in is essential. ### Red flags - **Per-unit pricing above £5/unit/month** — costs spiral for larger blocks and make the tool more expensive than it should be - **"Contact us for pricing"** — usually means enterprise pricing inappropriate for a 10-flat block - **Features you'll never use** — portfolio management for 50+ blocks, agent fee tracking, commercial lease modules. You're paying for complexity you don't need - **No free trial** — you need to see whether the interface makes sense for a non-professional before committing - **Desktop-only software** — cloud-based tools are shareable between directors and accessible from anywhere. Installed software on one director's laptop creates a single point of failure ## The cost-benefit calculation Before choosing any software, calculate the real cost of your current approach: **Time costs (typical volunteer block, 12 flats):** - Quarterly demand generation: 2-3 hours per quarter (8-12 hours/year) - Arrears chasing: 1-2 hours per overdue leaseholder per quarter - Year-end accounts: 6-10 hours if doing it from a spreadsheet - Section 20 consultation: 4-8 hours across the full process - AGM preparation and budget setting: 3-5 hours If software reduces total admin time by even 50%, that's 15-20 hours per year returned to volunteer directors who are already giving up their free time. At some point, the value of that time exceeds the software cost — particularly when the alternative is directors burning out and resigning. Director burnout is one of the [most common problems RMCs face](/blog/residents-management-company-problems/). **Error costs:** - A non-compliant demand — missing the landlord's name and address ([section 47, Landlord and Tenant Act 1987](https://www.legislation.gov.uk/ukpga/1987/31/section/47)) or the required summary of rights ([Section 21B, Landlord and Tenant Act 1985](https://www.legislation.gov.uk/ukpga/1985/70/section/21B)) — means the leaseholder doesn't have to pay until you fix it - A missed [18-month deadline](/blog/service-charge-18-month-rule/) means you cannot recover the cost at all - A botched Section 20 consultation means you can only recover £250 per leaseholder regardless of the actual cost One compliance error can cost more than years of software subscription. ## Free tools as a middle ground If full software isn't justified yet, free tools can handle the most painful individual tasks: - [Service Charge Demand Generator](/tools/service-charge-demand-generator/) — calculates each flat's share from lease percentages and shows a sample demand letter - [Service Charge Arrears Letter Generator](/tools/arrears-letter-generator/) — produces a template chase letter at one of three stages, stating what is outstanding and when it fell due - [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/) — maps out the full consultation timeline from your start date These don't replace integrated software for ongoing management, but they eliminate the worst spreadsheet pain points immediately — and they're free. ## When to invest **Invest now if:** You have active arrears cases, year-end accounts are due within 3 months, you're about to trigger Section 20 for major works, or your current director is threatening to resign because the admin is too much. **Wait if:** Your block has fewer than 6 units, everyone pays on time, and you have a director with strong spreadsheet skills who isn't going anywhere. **Never invest in:** Software that costs more per year than hiring an accountant to do your year-end accounts. For blocks under 10 flats with no arrears issues, a specialist accountant (£500-1,500/year) plus free tools may be more cost-effective than ongoing software. LevyBoard is service charge management software for volunteer RTM and RMC directors — guided workflows, automatic demand generation, arrears tracking, and an income and expenditure statement by fund at year end. It is £15 a month for a development of up to 15 flats. Free for 30 days, no card needed, and nothing is charged during the trial. To carry on after that, add a card before it ends. *This guide covers service charge management for residential blocks in England and Wales. This is general guidance, not financial or legal advice.* ## Sources - RICS Service Charge Residential Management Code — best practice standard for service charge accounting - Section 21B, Landlord and Tenant Act 1985 — service charge demand requirements - Section 20, Landlord and Tenant Act 1985 — consultation requirements for qualifying works ]]> https://levyboard.co.uk/blog/residents-management-company-problems/ https://levyboard.co.uk/blog/residents-management-company-problems/ Sat, 02 May 2026 00:00:00 GMT Common residents management company problems, from service charge arrears to Section 20 compliance, and practical fixes for volunteer directors. Section 20 of the Landlord and Tenant Act 1985. Miss a step and you cannot recover costs above that threshold — regardless of how necessary the work was. **Why it trips directors up:** The process has three formal stages with minimum notice periods, and the rules on what counts as a "qualifying long term agreement" versus "qualifying works" are genuinely confusing. Most volunteer directors encounter S20 for the first time when a roof starts leaking. **How to solve it:** - **Learn the process before you need it.** Read our [complete guide to Section 20 consultation](/blog/section-20-consultation-guide/) now — not when you're standing in a flooded hallway. - **Map the timeline early.** A full S20 consultation takes a minimum of 60-90 days from the initial notice to appointing a contractor. Use our free [Section 20 Timeline Calculator](/tools/section-20-timeline-calculator/) to work backward from your target start date and see every deadline. - **Document everything.** Keep copies of every notice, every response, and every decision. If a leaseholder later challenges the process at the FTT, your evidence trail is your defence. - **Get estimates right.** You must obtain at least two estimates, and leaseholders can nominate their own contractor. Budget time for this — contractors in the residential block space are often slow to quote. For a detailed breakdown of the legislation behind this, see our guide to [Section 20 under the Landlord and Tenant Act 1985](/blog/landlord-tenant-act-1985-section-20/). ## Problem 3: Finding and keeping directors Director burnout is the silent killer of residents management companies. The work is unpaid, time-consuming, and frequently thankless. When a director resigns and nobody steps up, the company risks being struck off by Companies House — which creates serious complications for property sales in the block. **Why it happens:** Most blocks have 6-20 leaseholders. Of those, perhaps 2-3 are willing to volunteer. Those same people end up doing everything — accounts, contractor management, arrears chasing, AGM organisation — for years. **How to solve it:** - **Be transparent about the workload.** Publish a summary of what directors actually do (see our [RMC director responsibilities guide](/blog/rmc-director-responsibilities/)) so leaseholders understand what they're asking of volunteers. - **Distribute tasks.** Not every director needs to do everything. One handles accounts, another manages contractors, a third handles communications. Formal role allocation at the AGM prevents the "one person does it all" problem. - **Make the work easier.** The less time each task takes, the less likely directors are to burn out. If generating service charge demands takes an afternoon with a spreadsheet, that's an afternoon a volunteer doesn't have. Our free [Service Charge Demand Generator](/tools/service-charge-demand-generator/) works out each flat's share in minutes. - **Set term limits.** Rotating directors every 2-3 years prevents burnout and builds a larger pool of people who understand how the block runs. ## Problem 4: Year-end accounts and financial compliance RMC directors must file annual accounts and a confirmation statement with Companies House — those are Companies Act duties and they apply whatever your lease says. The block's *service charge* accounts are a separate document, and what you must produce there is set by your lease; the RICS Service Charge Residential Management Code recommends a shape for it, as best practice and a likely lease requirement rather than a statutory rule in itself. Most volunteer directors have never seen a set, let alone produced one. **Why it's hard:** The standard format requires an income and expenditure statement, a balance sheet showing reserve fund position, and explanatory notes. Professional accountants charge £500-2,000 to prepare these for a small block. That's a significant chunk of a block's annual budget. **How to solve it:** - **Understand the format.** Our [service charge accounting guide](/blog/service-charge-accounting-guide/) walks through the full annual cycle — budgeting, collection, expenditure tracking, and year-end accounts in the standard format. - **Keep records throughout the year.** Year-end accounts are painful when you reconstruct 12 months of transactions from bank statements in January. Track income and expenditure monthly and the year-end becomes a summary exercise. - **Don't forget Companies House.** Every RMC must file a confirmation statement annually (£50 online). Miss the deadline and Companies House will send warning notices. Miss it repeatedly and they'll start the strike-off process — which can freeze property sales in your block. ## Problem 5: Disputes and poor communication Service charge disputes, maintenance disagreements, and complaints about how decisions are made are among the most common sources of leasehold property disputes. **Why it escalates:** Most disputes start small — a leaseholder questions why the gardening bill increased, or disagrees with a repair priority. Without clear communication about how decisions are made and what service charges cover, small questions become formal complaints. **How to solve it:** - **Publish the budget breakdown.** Send every leaseholder a clear summary showing each budget category, the total cost, and their individual share. Transparency prevents 90% of disputes. - **Hold an AGM.** Even if your lease doesn't strictly require it, an annual general meeting gives leaseholders a forum to ask questions and vote on major decisions. Minutes should be circulated within 14 days. Our [AGM guide for RTM and RMC directors](/blog/rtm-rmc-agm-guide/) covers agenda, notice requirements, quorum, and minute-taking. - **Respond to queries promptly.** A leaseholder who gets a clear answer within a week rarely escalates. One who is ignored for a month contacts the First-tier Tribunal. - **Know the redress options.** Leaseholders can apply to the FTT to challenge service charge reasonableness under Section 27A of the Landlord and Tenant Act 1985. Understanding this process — and being prepared for it — is better than being surprised by it. ## Problem 6: Managing contractors without experience Getting quotes, supervising work, and handling defects requires skills most volunteer directors don't have. Overpaying for substandard work is common. So is underspecifying the job and ending up with a dispute about what was agreed. **How to solve it:** - **Always get three quotes.** For any work over £250 per leaseholder, you're legally required to obtain at least two estimates under Section 20. Getting three is good practice for smaller works too. - **Put everything in writing.** Scope, price, start date, completion date, payment terms, defect liability period. A one-page specification prevents the "that wasn't included" conversation later. - **Check insurance.** Any contractor working on your block needs public liability insurance (minimum £2 million for most residential work) and, if they have employees, employers' liability insurance. Ask for certificates before work starts. - **Pay on completion, not upfront.** Stage payments are reasonable for large projects, but never pay the full amount before work is finished and inspected. ## The common thread Every problem on this list comes down to the same root cause: volunteer directors doing a professional managing agent's job without the tools, training, or time. The managing agent industry charges £60-200+ per block per month because the work is genuinely complex. The answer isn't necessarily hiring an agent — many blocks left agents precisely because of poor service or high costs. The answer is having the right systems to make each task faster and less error-prone. LevyBoard is guided block management software for volunteer directors — service charge accounting, arrears tracking, Section 20 consultation workflows for major works, and a fund-designated ledger that hands your accountant clean books at year end. It is £15 a month for a development of up to 15 flats. Free for 30 days, no card needed, and nothing is charged during the trial. To carry on after that, add a card before it ends. *This guide covers residents management companies in England and Wales. Scottish and Northern Irish leasehold law differs. This is general guidance, not legal advice — consult a solicitor for complex disputes or enforcement action.* ## Sources - Section 20, Landlord and Tenant Act 1985 — consultation requirements for major works - Section 21B, Landlord and Tenant Act 1985 — service charge demand requirements - Section 27A, Landlord and Tenant Act 1985 — application to FTT for service charge determination - RICS Service Charge Residential Management Code — best practice for service charge accounting - LEASE — Redress schemes for property management complaints - Companies House — Becoming a director of a residents management company ]]> https://levyboard.co.uk/blog/service-charge-accounting-guide/ https://levyboard.co.uk/blog/service-charge-accounting-guide/ Sat, 25 Apr 2026 00:00:00 GMT Service charge accounting for RTM and RMC directors: budgeting, collection, year-end accounts, what your lease requires, and common mistakes. RICS Service Charge Residential Management Code recommends a shape for it, and most leases either require that shape or are satisfied by it. Treat the Code as best practice and a likely lease requirement rather than as law in itself, and read your own lease for what it actually obliges you to produce. **Standard format for service charge accounts:** **Income section:** - Service charge demands raised - Actual payments received - Arrears brought forward / carried forward **Expenditure section (by category):** - Insurance - Maintenance and repairs - Cleaning and gardening - Utilities - Professional fees - Health and safety - Other costs **Summary:** - Total income vs total expenditure - Surplus or deficit for the year - [Reserve (sinking) fund](/blog/reserve-fund-sinking-fund-leasehold/) balance brought forward, contributions, expenditure, balance carried forward **Important:** Accounts should be prepared on an **accruals basis** — meaning costs are recorded in the period they relate to, not when they were paid. If you paid an insurance premium in March for April-March cover, the cost belongs in the new accounting year. When your accounts must reach leaseholders is set by your lease; RICS best practice guidance recommends producing them promptly after the year end. ⚠️ The six-month figure people quote is a different duty and it works differently: under [section 21 of the Landlord and Tenant Act 1985](https://www.legislation.gov.uk/ukpga/1985/70/section/21/1996-12-17) a leaseholder can **request** a written summary of the relevant costs, and you must then supply it within one month of the request or six months of the end of the period, whichever is later. That clock starts on a request, not automatically at your year end. For example accounts in the recommended format — including a worked example for a six-flat block — see our [service charge accounts format guide](/blog/service-charge-accounts-format/). ## Common mistakes in service charge accounting 1. **Mixing block and personal funds** — opens you to accusations of mismanagement and makes reconciliation impossible 2. **Not reconciling bank statements** — you discover errors at year-end instead of when they happen 3. **Forgetting the reserve fund** — the reserve fund balance must be shown separately in the accounts, not lumped with general expenditure 4. **Using cash basis instead of accruals** — this misallocates costs between years and doesn't match the standard format 5. **Missing the [18-month deadline](/blog/service-charge-18-month-rule/)** — costs incurred more than 18 months ago without a demand are irrecoverable 6. **Not issuing compliant demands** — a demand missing the landlord's name and address is not payable until corrected 7. **Treating ground rent as service charge income** — ground rent is due to the freeholder under the lease, not a cost of managing the block, and it carries its own demand requirements. Running it through the service charge account overstates both income and expenditure. See [why ground rent is not a service charge](/blog/ground-rent-leasehold-blocks/) ## When to use an accountant For most small blocks (4-15 flats), directors can prepare the accounts themselves using a spreadsheet or [service charge software](/blog/service-charge-software-guide/). An accountant is worth the cost when: - The block has complex finances (multiple reserve funds, ongoing major works) - You need certified or audited accounts (rare for RMCs below the audit threshold) - There's a dispute with leaseholders about the accounts — an independent accountant adds credibility - You simply don't have the time or confidence to do it yourself Typical accountant fees for a small block's year-end accounts: £500-1,500. For a simple review of accounts you've prepared: £200-400. ## Sources - Landlord and Tenant Act 1985, Section 21B — summary of rights and obligations accompanying demands - RICS — Service Charge Residential Management Code - LEASE — Service Charges Guidance *This guide applies to England and Wales. This is general information, not legal or accounting advice. For complex accounting situations, consult a qualified accountant familiar with service charge accounting.* ]]> https://levyboard.co.uk/blog/block-management-costs-comparison/ https://levyboard.co.uk/blog/block-management-costs-comparison/ Sat, 18 Apr 2026 00:00:00 GMT What block management costs in the UK: managing agent fees, self-management costs, and where volunteer directors can save without cutting corners. LEASE (Leasehold Advisory Service) for free guidance before paying solicitor rates. LEASE provides free initial advice on most leasehold management questions. ## Where NOT to cut costs - **D&O insurance** — the £150-400/year premium is trivial compared to the personal liability risk. Never skip this. - **[Section 20 compliance](/blog/section-20-consultation-guide/)** — cutting corners on the consultation process to save time can cost thousands if the process is voided. - **Building insurance** — underinsuring to reduce premiums exposes leaseholders to catastrophic risk. Ensure the rebuild value is current. - **Fire safety** — fire risk assessments, alarm maintenance, and emergency lighting are legal requirements, not optional extras. ## The cost of setting up: claiming RTM vs inheriting an RMC If your block doesn't yet have self-management and you are considering claiming RTM, the claim itself has upfront costs separate from the ongoing running costs above — company formation (£50), professional fees if you use a solicitor (typically £1,500–4,000), and tribunal fees if the landlord disputes the claim. Under changes that came into force in March 2025, leaseholders no longer have to pay the landlord's professional costs in an uncontested RTM claim. See our detailed guide to [RTM claim costs](/blog/right-to-manage-costs/) for a full breakdown. ## Making the decision: agent vs self-management The right answer depends on your block's circumstances: **Self-management works well when:** - You have 3+ willing, reliable directors - The block is small enough (4-20 flats) that individual directors know the building - Directors have the time for ongoing management (2-5 hours/week collectively) - The block has straightforward maintenance needs **A professional agent may be worth the cost when:** - You can't find enough willing directors - The block has complex needs (listed building, commercial elements, [large reserve fund](/blog/reserve-fund-sinking-fund-leasehold/)) - Major works are imminent and nobody has [S20 experience](/blog/landlord-tenant-act-1985-section-20/) - The block has a history of disputes that need professional mediation To put real numbers on the comparison for your own block, use our free [managing agent fee calculator](/tools/managing-agent-fee-calculator/) — it shows the annual agent cost against self-management, broken down per flat. ## Sources - Leasehold Advisory Service (LEASE) — free advice for leaseholders - Companies House — filing fees *This guide is for general information only. Costs and fee structures vary by region and provider. Always get specific quotes for your block.* ]]> https://levyboard.co.uk/blog/freehold-residents-management-company/ https://levyboard.co.uk/blog/freehold-residents-management-company/ Sat, 11 Apr 2026 00:00:00 GMT Guide to freehold residents management companies in England and Wales: how they work, how they differ from RTM companies, and directors' duties. Section 20 consultation for major works, health and safety compliance, and Companies House filing. ## Freehold RMC vs RTM company Both structures give leaseholders management control, but they differ in how that control is acquired. If you are weighing the statutory route, our guide walks through [the Right to Manage process](/blog/right-to-manage-process/) end to end: | | Freehold RMC | RTM Company | |---|---|---| | **How formed** | Leaseholders collectively purchase the freehold | Leaseholders exercise the statutory Right to Manage under the Commonhold and Leasehold Reform Act 2002 | | **Freehold ownership** | The company owns the freehold | The freeholder retains ownership; the RTM company takes over management functions | | **Cost to set up** | Purchase price of the freehold (varies — can be significant) | Statutory process with fixed costs (no purchase required) | | **Scope of control** | Full control — the company is the landlord | Management functions only — some landlord rights remain with the freeholder | | **Ground rent** | Eliminated (company owns the freehold) | Ground rent continues to the freeholder | **In practice:** Both types of company face the same day-to-day management challenges — service charge budgeting, arrears collection, Section 20 compliance, year-end accounts, and Companies House obligations. The differences are primarily legal and structural, not operational. There is also a third structure, [commonhold](/blog/commonhold-explained-directors/), which our separate guide compares with both. For a full breakdown of what directors handle, see our [guide to RMC director responsibilities](/blog/rmc-director-responsibilities/). ## How freehold RMCs are typically formed There are several routes: ### 1. Developer sets up the RMC at build time Many new-build developments include an RMC in the legal structure from the start. The developer creates the company, makes leaseholders members as they buy, and transfers the freehold to the company after the last flat is sold (or after a specified period). This is increasingly common in modern developments. ### 2. Leaseholders collectively purchase the freehold Existing leaseholders can exercise the **[right of collective enfranchisement](/blog/collective-enfranchisement-guide/)** under the Leasehold Reform, Housing and Urban Development Act 1993. This requires that at least two-thirds of the flats in the building are held by qualifying tenants (the building qualification test), and that at least half of those qualifying tenants participate in the claim. A nominee purchaser (usually a new company set up by the leaseholders) acquires the freehold at a price determined by statutory valuation. ### 3. Freeholder voluntarily sells Less common, but some freeholders will sell the freehold to leaseholders outside the statutory process, particularly for smaller blocks where the freehold value is modest. ## What freehold RMC directors are responsible for The responsibilities are the same as for any block management company. Key duties include: - **Service charges:** Setting budgets, issuing demands, collecting payments, [chasing arrears](/blog/service-charge-arrears-recovery-guide/) - **Building maintenance:** Arranging repairs, managing contractors, maintaining common parts - **Compliance:** [Section 20 consultations](/blog/section-20-consultation-guide/) for major works, fire safety, health and safety - **Insurance:** Arranging and maintaining [adequate buildings insurance](/blog/buildings-insurance-block-of-flats/) - **Companies House:** Filing annual confirmation statements and accounts - **Accounts:** Producing year-end service charge accounts in the form your lease requires — RICS/ICAEW guidance recommends a standard shape, but it is guidance rather than a statutory format **The additional responsibility of freehold ownership:** Unlike RTM directors, freehold RMC directors are also responsible for ground rent collection (if applicable to any remaining leases), [lease extensions](/blog/lease-extension-cost-guide/), and potentially granting new leases. These are landlord functions that don't apply to RTM companies. ## Common challenges for freehold RMCs ### Getting enough directors Most blocks need 3-5 directors for good governance. In a block of 8-12 flats, finding volunteers is often difficult. The same 2-3 people end up doing everything, leading to burnout and governance risk. ### Succession planning When a leaseholder sells their flat, they cease to be a member of the company. If they were a director, that directorship needs filling. Ensure your Articles of Association make it straightforward to appoint and remove directors. ### Decision-making disputes When leaseholders disagree about spending priorities (new windows vs. lower service charges), the democratic structure can create friction. Clear Articles, regular AGMs, and transparent budgeting reduce conflict. ### The [18-month rule](/blog/service-charge-18-month-rule/) Volunteer directors managing finances part-time are most at risk of missing the Section 20B deadline. Costs incurred more than 18 months ago without a demand or written notification are irrecoverable. For a wider look at the [common resident management company problems](/blog/residents-management-company-problems/) directors face — and practical fixes — see our dedicated guide. The [Leasehold and Freehold Reform Act 2024](/blog/leasehold-freehold-reform-act-2024/) is making some changes relevant to freehold RMCs — including new service charge transparency requirements and insurance disclosure rules when they come into force. Our guide explains which provisions are already in effect and what to expect. For the broader picture of what statutory rights leaseholders hold in England and Wales — service charge challenges, lease extensions, collective enfranchisement, and RTM — see our [leaseholder rights guide](/blog/leaseholder-rights-leasehold-reform/). ## Sources - Commonhold and Leasehold Reform Act 2002, Part 2 — Right to Manage - Leasehold Reform, Housing and Urban Development Act 1993, Part I — Collective Enfranchisement - Companies House — Becoming a director of a residents' management company *This guide applies to England and Wales. Scottish and Northern Irish property law differs significantly. This is general information, not legal advice.* ]]> https://levyboard.co.uk/blog/service-charge-18-month-rule/ https://levyboard.co.uk/blog/service-charge-18-month-rule/ Sat, 04 Apr 2026 00:00:00 GMT Section 20B explained for directors: the 18-month deadline for service charge demands, how to preserve your right to recover costs, and if you miss it. The 18-month rule is the most commonly missed compliance deadline for volunteer RTM and RMC directors. It's simple in principle — serve your demand within 18 months of incurring the cost — but easy to miss when you're [managing a block in your spare time](/blog/what-is-block-management/). ## What the 18-month rule says Section 20B of the Landlord and Tenant Act 1985 states that a leaseholder is not liable to pay a service charge if more than 18 months have elapsed since the costs were incurred — **unless** the leaseholder was notified in writing within that 18-month period **both** that the costs had been incurred **and** that they would subsequently be required, under the terms of their lease, to contribute to those costs by the payment of a service charge. In plain English: if you spend money on the building, you have 18 months to either demand payment or give the leaseholder a written notification. The notification has to do two things, not one — say that the costs have been incurred, and say that the leaseholder will have to contribute to them under their lease. A note that says only "a demand is coming" does not meet the second half. ## How the 18-month clock works The clock starts when costs are **incurred** — meaning when you receive the invoice or pay the contractor, not when the work was commissioned or completed. **Example:** Your block has emergency plumbing work done in January 2026. The plumber invoices you on 15 January 2026. The 18-month clock starts on 15 January 2026 and expires on 15 July 2027. If you haven't served a service charge demand by 15 July 2027 — or at minimum sent a written notification meeting both limbs below — the leaseholder is not liable to pay their share. ## The written notification safety net You don't necessarily need to issue the full demand within 18 months. A written notification is sufficient to preserve your right. This notification must: - Be in writing (email with proof of delivery, or letter) - State that the costs have been incurred - State that the leaseholder will subsequently be required, **under the terms of their lease**, to contribute to those costs by the payment of a service charge ⚠️ **Both of the last two are required, and the second one is the one people miss.** Section 20B(2) is conjunctive: the tenant must be notified "that those costs had been incurred **and** that he would subsequently be required under the terms of his lease to contribute to them by the payment of a service charge". A notification that says only that a demand will follow states the first limb and asserts that something is coming; it does not state that the leaseholder is liable to contribute **under the lease**. If the notification does not engage subsection (2), subsection (1) applies and the costs are irrecoverable. This is particularly useful for year-end accounting. If your financial year ends in March but you don't produce accounts until September, costs incurred early in the year might be approaching the 18-month mark. A simple written notification sent with the year-end accounts covers you. **Template notification:** > Dear [Leaseholder], > > This is to notify you that service charge costs totalling £[amount] have been incurred in respect of [description] during the period [dates]. You will subsequently be required, under the terms of your lease, to contribute to these costs by the payment of a service charge. A formal service charge demand will follow. This notification is provided in accordance with Section 20B of the Landlord and Tenant Act 1985. ## Common scenarios where directors miss the deadline ### Inherited arrears from a previous managing agent When your RTM company takes over management, you may inherit service charge debts. If the previous agent failed to demand payment within 18 months of the costs being incurred, those charges are irrecoverable — even though the failure wasn't yours. Check the dates on any inherited arrears before pursuing them. ### Large one-off costs at the end of a financial year An unexpected repair in month 11 of your accounting year might not make it into the year-end demand if accounts are delayed. If the demand is served more than 18 months after the invoice date, the cost is irrecoverable. ### Reserve fund expenditure Spending reserve money you have already collected is not a new demand. But if the works cost more than the reserve covers and you demand the balance, that demand must be served within 18 months of the cost being incurred, or a notification under section 20B(2) given in time. ### Multi-stage projects For works that span several months (e.g., a phased refurbishment), the clock runs separately for each invoice. An invoice from Month 1 has a different 18-month deadline from an invoice in Month 6. ## What to do if you've missed the deadline If the 18 months have passed without a demand or notification: 1. **Check your records** — did you send anything in writing that could count as a notification? An email or letter can count, but only if it told the leaseholder in writing both that the costs had been incurred and that they would be required, under the terms of their lease, to contribute to them by the payment of a service charge. A message saying only that a demand is coming is not enough. 2. **Check the lease** — some leases have their own demand timeframes that may differ from the statutory position. 3. **Seek legal advice** — a solicitor specialising in leasehold law can assess whether any exception or argument applies. 4. **Accept and prevent** — if the deadline is genuinely missed, the cost is irrecoverable from leaseholders. Put systems in place to prevent recurrence: calendar reminders, quarterly demand cycles, or [software that tracks demand deadlines automatically](/blog/block-management-software-guide/). ## Practical steps to stay compliant - **Issue demands promptly** — don't wait for year-end. Quarterly or half-yearly on-account demands are safer. - **Set calendar reminders** — for every significant expenditure, set a reminder at 12 months and 15 months. - **Send interim notifications** — if the full demand isn't ready, send a written notification to preserve your right. - **Track invoices against demands** — maintain a log that links every contractor invoice to the service charge demand period it's included in. - **Use the [arrears letter generator](/tools/arrears-letter-generator/)** — our free tool produces a template chase letter at one of three stages, stating what is outstanding and when it fell due. It asserts no deadline, charge or legal consequence. For a full guide to recovering unpaid service charges, see our [arrears recovery guide](/blog/service-charge-arrears-recovery-guide/). ## Sources - Landlord and Tenant Act 1985, Section 20B - LEASE — Service Charges Guidance *This guide applies to England and Wales. This is general information, not legal advice.* ]]> https://levyboard.co.uk/blog/block-management-software-uk/ https://levyboard.co.uk/blog/block-management-software-uk/ Sat, 28 Mar 2026 00:00:00 GMT UK block management software for volunteer RTM and RMC directors: the kinds of tool on offer, per-unit vs flat pricing, and what to test before you choose. section 47 of the Landlord and Tenant Act 1987, and the prescribed summary of tenants' rights and obligations required by section 21B of the Landlord and Tenant Act 1985, word for word. - **Section 48 notices** — a dedicated notice giving each leaseholder an address in England and Wales for serving notices on the landlord, under section 48 of the 1987 Act. - **A Section 20 consultation workflow** with the stages and deadlines of the England regulations, not just a checklist. - **Arrears tracking** with ageing and chase letters. - **Records your accountant can work from** — every cost recorded against its fund and each payment once it is matched to a demand, reserve money kept separate, and an income and expenditure statement by fund plus a full export at year end. Your accountant still prepares the company's statutory accounts; the point is that they check your records rather than rebuild them. **Nice-to-have features:** - Reminders for Companies House filing dates - Leaseholder communication portal - Document storage for leases, insurance policies and certificates - Bank feed integration for payment matching **Usually unnecessary for a single development:** - Portfolio management for many blocks - Contractor procurement platforms - API integrations See our detailed [evaluation checklist](/blog/block-management-software-guide/) for more on each. ## Per-development vs per-unit pricing This distinction matters more than most directors realise. **Flat fee per development:** You pay the same whatever the number of flats within a band. Predictable cost, and better value as the block gets larger. **Per-unit pricing:** Sounds affordable per flat — until you calculate the total for your block. | Block size | Flat fee (e.g. £15/month = £180/year) | Per unit (e.g. £100/unit/year) | |-----------|-------------------|------------------------| | 6 flats | £180/year | £600/year | | 12 flats | £180/year | £1,200/year | | 15 flats | £180/year | £1,500/year | The figures are examples to show the arithmetic, not quotes. A flat fee often steps up above a certain number of flats, so check where the bands fall for your block, and check whether there are extra charges per director or per building. ## What to test before you commit If a platform offers a free trial, use it on your real block. Make the most of it: 1. **Enter your actual block** — every flat, with the real shares from the leases, across every schedule. Don't test with two dummy units. 2. **Generate a demand and read every page.** Does it carry the landlord's name and address? Is the prescribed summary of rights attached, under the title "Service Charges – Summary of tenants' rights and obligations", word for word, in at least 10-point print as regulation 3 of the 2007 England regulations requires? Does it show how the flat's figure was worked out? 3. **If you are an RTM company, check who it names.** Under Schedule 7, paragraph 12(2) of the Commonhold and Leasehold Reform Act 2002, references to the landlord in section 47 "include the RTM company" — but the freeholder is still the landlord under the lease. A tool that puts only one party on the demand without asking which you are has made a legal judgement for you. 4. **Run through a Section 20 scenario** — can you set up a consultation and see each stage's notice and deadline? Or is it just a checklist? 5. **Ask what your accountant gets.** Look for categorised, fund-designated records and an income and expenditure statement by fund, with an export. Be wary of a tool that claims to replace the accountant: your company still has to file statutory accounts. 6. **Check access for the whole board.** Can more than one director see the records, and is there a per-seat charge? 7. **Check support** — is there documentation and a named email address, or just a chatbot? 8. **Check you can leave.** Can you export all your data, including after cancelling? ## The regulatory direction The Leasehold and Freehold Reform Act 2024 contains provisions that will change what a service charge demand must look like. Section 55 will replace the section 21B summary with a new section 21C, under which a landlord "may not demand the payment of a service charge unless the demand— (a) is in the specified form, (b) contains the specified information, and (c) is provided to the tenant in a specified manner", with the details set by regulations. legislation.gov.uk records section 55 as not yet in force. When it is brought into force, the format of every demand will need to change. It is a fair question to ask any vendor how it will handle that. ## Frequently asked questions ### Do I need block management software at all? Not legally. Many small blocks run on spreadsheets. The case for software is that the statutory parts of a demand, the Section 20 timetable and the fund records are easy to get wrong by hand, and expensive when you do. ### Does software replace a managing agent? It replaces the administrative part of what an agent does — demands, notices, records. It does not replace the judgement: the directors still decide, and still need professional advice for disputes and major works. ### Does block management software produce year-end service charge accounts? Be careful with the claim. Good software produces the records and an income and expenditure statement your accountant works from. The statutory company accounts, and any accountant's report your leases or guidance call for, are still prepared by an accountant. ## How LevyBoard compares LevyBoard is block management software for volunteer RMC and RTM directors: demands calculated per cost centre from the lease shares, with the prescribed summary transcribed verbatim; section 48 notices; Section 20 consultation for major works; arrears and chase letters; and a fund-designated ledger with an income and expenditure statement by fund at year end. It costs £15 a month for a development of up to 15 flats and £25 a month for 16 to 40, however many buildings, with no per-unit charge. You can open the [sample documents](/sample-service-charge-demand.pdf) before you decide anything. ## Sources - Landlord and Tenant Act 1987, section 47 — landlord's name and address in demands - Landlord and Tenant Act 1987, section 48 — notification of address for service - Landlord and Tenant Act 1985, section 21B — notice to accompany demands for service charges - SI 2007/1257, regulation 3 — form and content of the summary of rights and obligations - Leasehold and Freehold Reform Act 2024, section 55 — service charge demands (not yet in force) - Commonhold and Leasehold Reform Act 2002, Schedule 7, paragraph 12 - SI 2003/1987, regulation 6 — the £250 Section 20 threshold *This guide is for general information only and covers blocks in England. Always check the specific requirements of your lease and the current legal position before making software decisions; for advice on your own block, start with the free service at the Leasehold Advisory Service (LEASE).* ]]> https://levyboard.co.uk/blog/landlord-tenant-act-1985-section-20/ https://levyboard.co.uk/blog/landlord-tenant-act-1985-section-20/ Sat, 21 Mar 2026 00:00:00 GMT Section 20 of the Landlord and Tenant Act 1985 for RTM and RMC directors: when it applies, what changes under right to manage, the stages and the cost cap. 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, or the tribunal has dispensed with it. The two key thresholds, both set by the Service Charges (Consultation Requirements) (England) Regulations 2003: - **Works:** Section 20 applies to qualifying works where the cost to any single leaseholder exceeds **£250** (regulation 6) - **Long-term agreements:** it applies to a qualifying long-term agreement (any agreement for a term of more than 12 months) where any single leaseholder's share exceeds **£100** in an accounting period (regulation 4) 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). With unequal shares, test the flat with the largest share. ## Who is "the landlord" for Section 20 in your block? Section 20 puts the consultation duty on "the landlord". In a self-managed block, who that is depends on how the block is run. - **An RMC that owns the freehold is the landlord.** The company consults. - **An RTM company is the landlord for these purposes.** The next section explains why. ## Section 20 after right to manage When leaseholders acquire the right to manage, the Commonhold and Leasehold Reform Act 2002 applies the service charge sections of the 1985 Act — sections 18 to 30, which include section 20 — to the RTM company. Schedule 7, paragraph 4 provides: > "(1) Sections 18 to 30 of the 1985 Act (service charges) have effect with the modifications provided by this paragraph. > (2) References to the landlord are to the RTM company." So for Section 20, the RTM company is the landlord. It is the RTM company that must consult before works over £250 a flat or a qualifying long-term agreement, and it is the RTM company's recovery that is capped if it does not. That follows from what the company takes over. Section 96 of the 2002 Act makes the landlord's management functions under the leases "instead functions of the RTM company", and defines management functions as "functions with respect to services, repairs, maintenance, improvements, insurance and management". Commissioning major works is one of them. Three RTM-specific points directors miss: **1. The freeholder can count as a "tenant".** Paragraph 4(3) of Schedule 7 adds that, for these sections, "References to a tenant of a dwelling include a person who is landlord under a lease of the whole or any part of the premises (so that sums paid by him in pursuance of section 103 of this Act are service charges)." Section 103 makes the landlord pay the RTM company the share of costs that falls on flats or units not held by qualifying tenants. Where your freeholder makes those payments, the cautious course is to serve your Section 20 notices on the freeholder as well as on every leaseholder, because on the wording it is one of the "tenants" whose contribution is being consulted on. **2. Costs from before you took over are not yours to collect.** Section 97(5) provides that the RTM company is not entitled to be paid so much of the service charges "as is required to meet costs incurred before the right to manage was acquired". Works the freeholder or its agent commissioned before the acquisition date were theirs to consult on; new works and new contracts from that date are the RTM company's. **3. Existing contracts arrive with notices, not consultation.** Section 92 requires the outgoing manager to give notices about existing management contracts to the contractor and to the RTM company. Any new agreement the RTM company then enters for more than twelve months is its own, and is a qualifying long-term agreement needing consultation if any leaseholder's share will exceed £100 in an accounting period. ## Why this matters for RTM and RMC directors Professional agents have systems and staff to run consultations. Volunteer directors typically have neither, which is why the cap bites hardest in self-managed blocks. 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** per accounting period for long-term agreements), unless the tribunal grants [dispensation under section 20ZA](/blog/section-20-dispensation/). The rest of the cost does not disappear — the company still owes the contractor — but it can no longer be recovered through the service charge. For a £50,000 roof replacement on a 10-flat block with equal shares, failing to consult means recovering £2,500 instead of £50,000. That £47,500 shortfall is the company's problem. ## The consultation process in brief For qualifying works that are not carried out under a long-term agreement and for which public notice is not required — the usual position for a self-managed block — the requirements are in Schedule 4, Part 2 of the 2003 Regulations. In outline: **Stage 1 — Notice of intention:** Write to every leaseholder (and any recognised tenants' association) describing the proposed works, explaining why they're necessary, and inviting written observations and contractor nominations within the relevant period — 30 days from the date of the notice. Use our [Section 20 Notice Generator](/tools/section-20-notice-generator/) to draft the notice for each stage. **Stage 2 — Obtain estimates:** If leaseholders nominated a contractor, try to obtain an estimate from the nominee, following the rules on whose nomination to use when there are several. At least one estimate must come from a person "wholly unconnected" with the landlord — and where the landlord is a company, a director, or a close relative of a director, counts as connected. **Stage 3 — Notice of estimates:** Supply every leaseholder with a statement of at least two of the estimates and a summary of the Stage 1 observations with your response, make all the estimates available for inspection, and invite comments within a further 30 days. **After the contract is awarded:** within 21 days of entering into the contract, give notice of your reasons for choosing that contractor — unless you chose a nominated contractor or the lowest estimate, in which case this step does not apply. For a full step-by-step walkthrough, see our [complete Section 20 consultation guide](/blog/section-20-consultation-guide/). ## Common situations directors face ### "The roof is leaking — can we skip the consultation?" Not by deciding to. There is no emergency exemption written into section 20 itself. What exists is dispensation: under section 20ZA(1), the tribunal may dispense with all or any of the consultation requirements "if satisfied that it is reasonable to dispense with the requirements". Genuinely urgent works are a typical reason to apply — but it is the tribunal's decision, not the directors'. If the works cannot wait, do what is needed to make the building safe, record why, and apply to the First-tier Tribunal (Property Chamber) for dispensation promptly. Our dispensation guide, linked above, covers how the tribunal approaches it. ### "All the leaseholders agree verbally — do we still need to consult?" Yes. Section 20 limits contributions unless the consultation requirements have been complied with or dispensed with by the tribunal. Informal agreement is neither. Verbal consent does not replace the prescribed notices and response periods. ### "We're renewing the cleaning contract — is that a Section 20 issue?" If the new agreement is for a term of more than 12 months and any leaseholder's share exceeds £100 in an accounting period, yes. This catches many directors off guard: grounds maintenance, cleaning, lift and fire-alarm maintenance contracts, and a managing agent's appointment, can all be qualifying long-term agreements when they run for more than a year. ### "What about the major works done before we took over management?" If the works were commissioned by the previous landlord or managing agent before the RTM company acquired the right to manage, the consultation obligation was theirs, and under section 97(5) of the 2002 Act the RTM company cannot collect service charges to meet costs incurred before acquisition. New works and new contracts from the acquisition date are the RTM company's. ## Related legislation Section 20 doesn't exist in isolation. Key related provisions: - **Section 20B** — the [18-month rule](/blog/service-charge-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 section 47 of the Landlord and Tenant Act 1987) ## Planning your timeline Use our free [Section 20 Timeline Calculator](/tools/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. Before you start, work through the [Section 20 consultation requirements checklist](/blog/section-20-requirements-checklist/) — it covers every qualifying condition and notice requirement in a pre-flight format. The two notice periods alone add up to at least 60 days, before allowing time to gather estimates. In practice, allow 3-5 months from the first notice to starting works. ## What the 2024 reforms mean for Section 20 At the time of writing (October 2026), legislation.gov.uk lists amendments to section 20 made by the [Leasehold and Freehold Reform Act 2024](/blog/leasehold-freehold-reform-act-2024/) that have not yet been brought into force. Until they are, the rules described in this guide remain the operative ones. Check the "Changes to legislation" panel on the section 20 page before relying on this guide for works planned well into the future. ## Sources - Landlord and Tenant Act 1985, Section 20 - Landlord and Tenant Act 1985, Section 20ZA — dispensation - Commonhold and Leasehold Reform Act 2002, Section 151 - Commonhold and Leasehold Reform Act 2002, Schedule 7, paragraph 4 — service charges under right to manage - Commonhold and Leasehold Reform Act 2002, Section 96 — management functions - Commonhold and Leasehold Reform Act 2002, Section 97 — management functions: supplementary - Commonhold and Leasehold Reform Act 2002, Section 92 — notices of existing contracts - Commonhold and Leasehold Reform Act 2002, Section 103 — landlord contributions to service charges - Service Charges (Consultation Requirements) (England) Regulations 2003 - SI 2003/1987, Schedule 4, Part 2 — consultation for qualifying works *This guide applies to England; Wales has its own consultation regulations. 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).* ]]> https://levyboard.co.uk/blog/rmc-director-responsibilities/ https://levyboard.co.uk/blog/rmc-director-responsibilities/ Sat, 14 Mar 2026 00:00:00 GMT Guide to RMC and RTM director responsibilities in England and Wales: legal duties, service charges, Companies House, Section 20 and practical tips. Commonhold and Leasehold Reform Act 2002 to take over management from a landlord or professional agent. If you are new to leasehold management structures, see our plain-English guide to [what an RMC is and how it differs from an RTM company](/blog/what-is-an-rmc/), and our walkthrough of how leaseholders [qualify for and claim the Right to Manage](/blog/right-to-manage-process/). As a director of either type of company, you have two overlapping sets of duties: 1. **Company law duties** — as a director of a limited company registered with Companies House 2. **Leasehold management duties** — as the party responsible for maintaining the building and collecting service charges under the terms of the leases ## Company law duties Under the Companies Act 2006, every company director must: - **Act within their powers** — follow the company's Articles of Association and make decisions at properly constituted board meetings - **Promote the success of the company** — act in the interest of the members (leaseholders) as a whole, not in your own interest - **Exercise independent judgement** — don't simply defer to one dominant director or an external adviser without applying your own assessment - **Exercise reasonable care and skill** — you're not expected to be a property professional, but you are expected to be diligent - **Avoid conflicts of interest** — if you're a plumber and the block needs plumbing work, declare your interest and recuse yourself from the decision - **Not accept benefits from third parties** — no kickbacks from contractors - **Declare interests in proposed transactions** — if a decision could benefit you personally, disclose it to the other directors **Personal liability:** Directors can be personally liable for breaches of these duties. Directors' and officers' (D&O) insurance is strongly recommended — it typically costs £150–400/year for a small block and protects individual directors against personal claims. ## Building management duties ### Service charge budgeting and collection You're responsible for: - Setting an annual service charge budget covering all anticipated costs (insurance, maintenance, cleaning, management, reserve fund contributions) - Calculating individual leaseholder contributions based on the lease percentage splits - Issuing valid service charge demands (compliant with [section 47 of the Landlord and Tenant Act 1987](https://www.legislation.gov.uk/ukpga/1987/31/section/47)). Use our free [service charge demand generator](/tools/service-charge-demand-generator/) to see what a compliant demand looks like. - Collecting payments and tracking who has paid - [Chasing arrears](/blog/service-charge-arrears-recovery-guide/) within the [18-month statutory deadline](/blog/service-charge-18-month-rule/) - Producing year-end service charge accounts in whatever form your lease requires — RICS/ICAEW guidance recommends a standard shape, but it is guidance and a likely lease requirement, not a statutory format ### Building maintenance You must keep the building in good repair as required by the leases. This typically covers: - **Structural elements** — roof, external walls, foundations - **Common parts** — hallways, staircases, lifts, communal gardens - **Building services** — communal heating, lighting, entry systems - **Health and safety** — fire safety (fire risk assessment, escape routes, alarm testing), asbestos management, gas safety for communal systems, legionella risk assessment; see our guide to [Building Safety Act duties](/blog/building-safety-act-directors/) You don't need to do the work yourself — but you do need to arrange it, supervise it, and pay for it from the service charge fund. ### Section 20 consultation Before carrying out works costing more than £250 per leaseholder, you must follow the [Section 20 consultation process](/blog/section-20-consultation-guide/). This is a three-stage statutory process with consultation periods (minimum 30 days at Stages 1 and 3). Missing any step can cap the recoverable cost at £250 per leaseholder — regardless of the actual expenditure. ### Insurance You must arrange adequate buildings insurance for the block. Most leases specify the minimum cover required. The block should be insured for its **rebuild value** (the cost to demolish and reconstruct), not its market value — underinsuring can mean the insurer only pays a proportion of any claim. Leaseholders have a right under the Landlord and Tenant Act 1985 to request a written summary of the policy and to inspect the policy document. For a full breakdown of what to cover, how to assess the rebuild value, and how commission rules work under current FCA rules, see our guide to [buildings insurance for blocks of flats](/blog/buildings-insurance-block-of-flats/). Check: - Is the rebuild value up to date? - Does the policy cover all the risks specified in the lease? - Is the excess reasonable? - Are all leaseholders named or notified? ### Companies House compliance As a limited company, your RMC must: - File a **confirmation statement** annually (£50 online, or £110 on paper) - File **accounts** (which may qualify as dormant accounts depending on the company's structure and accounting treatment — confirm with your accountant) - Keep the **registered office address** up to date - Maintain a **register of members** (all leaseholders who are members of the company) - Notify Companies House of any **changes to directors** (appointments, resignations, change of address) Missing the confirmation statement deadline can result in the company being struck off the register — which creates serious legal problems for the management of the block. ### Leaseholder communication While not always a legal requirement, good communication prevents disputes: - Hold an **Annual General Meeting** (AGM) — most Articles require this. See our [practical AGM guide for RTM and RMC directors](/blog/rtm-rmc-agm-guide/) for agenda, notice, quorum, and minute-taking requirements. - Share the annual budget and accounts with all leaseholders - Notify leaseholders of planned works and their estimated cost - Respond to leaseholder queries within a reasonable timeframe - Keep minutes of board meetings and make them available ## What you're NOT responsible for - **Individual flats** — the interior of each flat is the leaseholder's responsibility (unless the lease says otherwise) - **Neighbour disputes** — you can enforce lease covenants (noise, subletting) but you're not a mediator - **Legal advice** — you're expected to seek professional advice for complex issues, not to be a solicitor - **Professional-grade management** — volunteer directors are held to a standard of reasonable care, not the standard of a qualified surveyor ## Practical tips for new directors - **Get D&O insurance** — it's cheap relative to the personal risk - **Set up a dedicated bank account** — never mix block funds with personal accounts - **Document everything** — decisions, spending approvals, maintenance reports, leaseholder communications - **Build a calendar** — Companies House deadlines, insurance renewals, gas safety checks, fire risk assessment reviews - **Don't go it alone** — split responsibilities among directors. One handles finances, one handles maintenance, one handles compliance. For a fuller picture of the [common challenges facing RMC directors](/blog/residents-management-company-problems/) and how to handle them, see our dedicated guide. - **Know when to get help** — a solicitor for lease interpretation, an accountant for year-end accounts, a surveyor for major works - **Keep an eye on the law** — the [Leasehold and Freehold Reform Act 2024](/blog/leasehold-freehold-reform-act-2024/) is being commenced in stages, and several of its provisions change what directors have to disclose and what leaseholders can demand. Our guide tracks what is already in force and what is still awaiting secondary legislation. ## Sources - Companies Act 2006, Part 10, Chapter 2 — General duties of directors - Commonhold and Leasehold Reform Act 2002, Part 2 — Right to Manage - Landlord and Tenant Act 1987, section 47 (landlord's name and address on demands) - Companies House — Becoming a director of a residents' management company - Leasehold Advisory Service (LEASE) *This guide applies to England and Wales. Scottish and Northern Irish leasehold law differs significantly. This is not legal advice — seek professional guidance for your specific situation.* ]]> https://levyboard.co.uk/blog/block-management-software-guide/ https://levyboard.co.uk/blog/block-management-software-guide/ Sat, 07 Mar 2026 00:00:00 GMT How to choose block management software as a volunteer RTM or RMC director: the features that matter, what to avoid, and how to evaluate options. section 47 of the Landlord and Tenant Act 1987) - Tracks which demands have been sent and which are outstanding Try our free [service charge demand generator](/tools/service-charge-demand-generator/) to see what a compliant demand looks like. **Watch out for:** Tools that only generate invoices, not statutory service charge demands. The legal requirements for a valid demand are specific — a generic invoice template won't comply. ### 2. Arrears tracking You need to see, at a glance, who owes what and for how long. Key features: - Dashboard showing all outstanding balances by unit - Payment recording (manual or bank feed) - Automatic ageing (14 days, 30 days, 60 days, 90+ days) - Template chase letters at each stage - The [18-month rule](/blog/service-charge-arrears-recovery-guide/) flagged visually — any cost approaching the Section 20B deadline should be highlighted - Use our free [arrears letter generator](/tools/arrears-letter-generator/) to see example chase letters at each stage ### 3. Section 20 consultation workflow This is where self-managed blocks face the most risk. A missed deadline can void the entire consultation and cap recoverable costs at £250 per leaseholder. Software should: - Walk you through all three stages step by step - Calculate statutory deadlines automatically from your start date - Generate notice templates for each stage - Track leaseholder observations and contractor nominations - Log when notices were served and how Most professional agent software includes S20 compliance. Many tools aimed at smaller blocks do not — check before committing. Read our [full S20 guide](/blog/section-20-consultation-guide/) for the process detail, or try our free [Section 20 timeline calculator](/tools/section-20-timeline-calculator/) to see how the deadlines work. ### 4. Year-end service charge accounts What your block must produce at year end — in what format, and certified by whom — is set by your lease, not by a general statutory rule. RICS/ICAEW guidance recommends a shape for it: an accruals basis, expenditure shown by category, surplus or deficit carried forward, the reserve fund balance kept separate, and an independent accountant's report. That is best practice and a likely lease requirement rather than a statutory duty in itself. Separately, section 21 of the Landlord and Tenant Act 1985 gives any leaseholder the right to *request* a written summary of the relevant costs for a 12-month period. Section 21(4): the landlord "shall comply with the request within one month of the request or within six months of the end of the period referred to in subsection (1)(a) or (b) whichever is the later." Section 21(6): where the service charges are payable by "the tenants of more than four dwellings", the summary "shall be certified by a qualified accountant". ⚠️ **Follow that link to the point-in-time version, not the default view.** The default `/section/21` page shows a *substituted* section 21, commenced only so far as it confers a regulation-making power — it contains neither "more than four dwellings" nor "qualified accountant". The text that remains in force is the 1996 point-in-time version linked above. Software should keep the underlying records clean — every demand, payment and cost categorised, with the reserve fund held separately — so your accountant works from that rather than re-keying data from separate spreadsheets. ### 5. Companies House reminders RTM companies and RMCs must file an annual confirmation statement with Companies House. Missing the deadline can lead to enforcement action and ultimately the company being struck off the register. Software with automated reminders for this (and insurance renewal, gas safety certificates, and other recurring deadlines) prevents costly oversights. ## Features that don't matter (yet) For a small self-managed block, some features commonly listed in block management software are unnecessary: - **Portfolio management** — you manage one block, not fifty - **Contractor management platforms** — you use local tradespeople, not a managed supply chain - **Resident portals with messaging** — a WhatsApp group works fine for 12 leaseholders - **Mobile apps** — nice to have, but not a reason to choose one platform over another - **API integrations** — unless you're connecting to external accounting software, skip this ## Pricing: what to expect Block management software pricing varies widely (our [UK comparison of the options](/blog/block-management-software-uk/) explains per-unit versus flat pricing): | Tier | Typical Cost | Who It's For | |------|-------------|-------------| | Free/DIY | £0 | Spreadsheets + Word templates | | Entry | £100–300/year per block | Small self-managed blocks | | Mid-range | £60–100/month | Small managing agents | | Professional | £100–200/month | Mid-size agents, 10+ blocks | | Enterprise | £200+/month | Large portfolios | Volunteer directors should look at the entry tier. If the pricing is per-unit rather than per-block, calculate the total for your block size — per-unit pricing can scale surprisingly fast for blocks of 15+ flats. **Red flags on pricing:** - Hidden setup fees - Per-user charges (you might have 3-4 directors who need access) - Contracts longer than monthly or annual - Pricing that requires a sales call to discover ## Evaluation checklist Before committing to any platform: - [ ] Does it generate statutory service charge demands (not just invoices)? - [ ] Does it track arrears with ageing and chase letter templates? - [ ] Does it include Section 20 consultation workflow? - [ ] Does it produce year-end accounts in the standard format? - [ ] Is the pricing per-block (flat rate) or per-unit? - [ ] Can multiple directors access it without per-seat charges? - [ ] Is there a free trial long enough to enter real data? - [ ] Does it handle your block size (number of units)? - [ ] Are guided workflows included, or does it assume property management knowledge? - [ ] Is the platform actively maintained (last update within 6 months)? If your main need is the financial side rather than full block management, our guide to [service charge software options](/blog/service-charge-software-guide/) covers the narrower category of tools focused on demands, arrears, and accounting. ## Sources - Landlord and Tenant Act 1987, section 47 (landlord's name and address on demands) - RICS — Service Charge Residential Management Code *This guide is for general information only. Always check the specific requirements for your lease and jurisdiction before choosing software or changing your management processes.* ]]> https://levyboard.co.uk/blog/service-charge-arrears-recovery-guide/ https://levyboard.co.uk/blog/service-charge-arrears-recovery-guide/ Sat, 28 Feb 2026 00:00:00 GMT Recovering unpaid service charges for RTM and RMC directors: the 18-month rule, chasing in writing, FTT referral, and county court action. Section 20B of the Landlord and Tenant Act 1985 sets a hard deadline: service charge demands must be served within **18 months of the costs being incurred**. If you miss this window, the leaseholder is not liable to pay. There is one exception, and it has two limbs. If you notify the leaseholder in writing within the 18-month period both that the costs have been incurred and that they will subsequently be required, under the terms of their lease, to contribute to those costs by the payment of a service charge, you preserve your right to demand payment later. A notification that says only that a demand will follow states the first limb but not the second, and does not engage the exception. The written notification must also happen within the 18 months. See our [18-month rule guide](/blog/service-charge-18-month-rule/) for the wording. **What this means in practice:** - Issue demands promptly after costs are incurred — don't wait until year-end - If a large expense hits late in the financial year, send a written notification immediately even if the full demand isn't ready - Keep copies of all demands and notifications with dates of service For a volunteer director juggling a day job, the 18-month rule is the single easiest compliance requirement to miss. Mark your calendar. ## Step-by-step arrears recovery process ### Step 1: Verify the demand is valid Before chasing, confirm: - The service charge demand was properly served (with the leaseholder's name and address) - The demand includes the landlord's name and address (required by [section 47 of the Landlord and Tenant Act 1987](https://www.legislation.gov.uk/ukpga/1987/31/section/47)) - The charges relate to costs actually incurred (not estimates, unless the lease allows on-account demands) - The demand was served within the 18-month time limit If the original demand was defective, re-serve a corrected version before pursuing arrears. ### Step 2: Send a formal reminder (14 days) Send a written reminder stating: - The amount owed and the period it covers - The lease clause requiring payment - A 14-day deadline to pay or respond - Contact details for queries Keep this professional and factual. Many non-payments are simple oversights — people are busy, letters get lost, direct debits fail. Use our free [arrears letter generator](/tools/arrears-letter-generator/) to draft the letter itself. ⚠️ It produces a template at one of three stages and deliberately asserts no deadline, charge or legal consequence — so if your lease supports the payment window described above, you add it yourself. ### Step 3: Send a formal arrears letter (30 days) If the first reminder doesn't produce payment, send a formal arrears letter: - Restate the amount owed with any interest or late payment charges your lease permits - Reference the lease clause - Set a 30-day deadline - State that you will refer the matter to the First-tier Tribunal if payment is not received - Include a summary of the leaseholder's rights (right to challenge at the FTT, right to request a summary of costs) ### Step 4: Consider the First-tier Tribunal (FTT) The First-tier Tribunal (Property Chamber) determines whether service charges are reasonable and payable. Either party can apply — the landlord (RTM company) or the leaseholder. Applying to the FTT has advantages over county court: - **Lower cost** — application fees are modest compared to court fees - **No costs risk** — the FTT rarely awards costs against either party, so losing doesn't mean paying the other side's legal fees - **Specialist knowledge** — tribunal members understand leasehold law The FTT can determine that the charges are payable but cannot enforce payment directly. If the leaseholder still refuses to pay after a favourable determination, you need a county court judgment to enforce. ### Step 5: County court action For straightforward debts (the charges have been determined as payable, or the leaseholder hasn't challenged them), you can apply to the county court for a money judgment. For debts under £10,000, this is typically done through the small claims track. Before issuing a claim, you must follow the applicable Pre-Action Protocol. For debt claims against individual leaseholders, check whether the Debt Claims Pre-Action Protocol applies — it typically requires a 30-day response period: - Send a letter of claim setting out the amount, how it's calculated, and what you want - Allow the response period specified in the applicable protocol (typically 30 days for debt claims) before proceeding - Consider mediation before proceeding **Costs to consider:** Court fees, potential solicitor costs (though small claims can be handled without a solicitor), and the time involved in preparing the claim. ### Step 6: Forfeiture (last resort) Forfeiture — taking back the lease — is the nuclear option and is rarely used for service charge arrears alone. The conditions are strict: arrears must exceed **£350** or have been outstanding for more than **3 years**, and the amount must be agreed or determined by a court or tribunal. In practice, the threat of forfeiture is more powerful than the action itself. Most leaseholders will pay when they understand the potential consequences. ## What if the leaseholder disputes the charges? A leaseholder can [challenge the charge at the FTT](/blog/challenge-service-charge-tribunal/). Common grounds include: - **Reasonableness** — the charges are higher than market rate - **Consultation failures** — Section 20 wasn't followed for major works - **Service standards** — poor quality of services provided - **Lease interpretation** — disagreement about what the lease permits If a leaseholder raises a genuine dispute, take it seriously. Document your response. If you can resolve it informally — by providing better information, correcting an error, or agreeing a payment plan — that's almost always better than tribunal proceedings. ## Interest and late payment charges Check your lease. Some leases allow interest on late payments (typically 2-4% above base rate). Some include a fixed late payment charge. If your lease doesn't specify interest or late charges, you generally cannot add them. Even where the lease permits interest, applying it from day one can damage the relationship with a leaseholder who simply forgot. Consider starting interest only after a formal demand has gone unanswered for 30+ days. ## Practical tips for volunteer directors - **Keep meticulous records** — every demand, reminder, and response, with dates. If you end up at the FTT, records are everything. - **Don't delay** — the 18-month rule starts from when costs are incurred, not when you notice the arrears. - **Communicate early** — a quick phone call or email after a missed payment prevents many formal disputes. - **Offer payment plans** — a leaseholder genuinely struggling financially is more likely to pay £100/month than a lump sum they can't afford. - **Never threaten what you won't do** — don't mention forfeiture unless you genuinely intend to pursue it. Empty threats damage credibility. - **Get the block's details right** — ensure unit numbers, names, and lease percentages are accurate before sending demands. - **Know the leaseholder's statutory rights** — leaseholders have rights to request a summary of service charge costs, to inspect underlying accounts, and to challenge charges at the FTT. If a leaseholder invokes these rights, comply promptly. Our guide to [leaseholder rights in England and Wales](/blog/leaseholder-rights-leasehold-reform/) covers the full set of statutory protections available to them. ## Sources - Landlord and Tenant Act 1985, Section 20B (limitation of service charges) - Landlord and Tenant Act 1987, section 47 (landlord's name and address on demands) - First-tier Tribunal (Property Chamber) - LEASE — Service Charges Guidance *This guide is for general information only and does not constitute legal advice. If you are pursuing service charge arrears, consider seeking advice from a qualified solicitor or the Leasehold Advisory Service (LEASE).* ]]> https://levyboard.co.uk/blog/section-20-consultation-guide/ https://levyboard.co.uk/blog/section-20-consultation-guide/ Sat, 21 Feb 2026 00:00:00 GMT Step-by-step guide to a Section 20 consultation for RTM and RMC directors: all three stages, timelines, what each notice must contain and common mistakes. Section 20 of the Landlord and Tenant Act 1985 (as amended by Section 151 of the Commonhold and Leasehold Reform Act 2002). It requires the landlord — which includes RTM companies and RMCs acting in the landlord's role — to consult with leaseholders before: - Carrying out **qualifying works** where the cost to any single leaseholder exceeds **£250** - Entering into a **qualifying long-term agreement** (any contract over 12 months) where the cost to any single leaseholder exceeds **£100 per year** The consultation must follow a prescribed sequence of notices and response periods. Skipping any stage, or failing to allow the minimum consultation periods, can invalidate the process. ## When does Section 20 apply to your block? The £250 threshold applies per leaseholder, not per block. In a block of 12 flats, qualifying works costing more than £3,000 total (12 × £250) would trigger the consultation requirement — assuming equal lease percentage splits. Common triggers for RTM/RMC directors: - **Roof repairs or replacement** — almost always above the threshold for blocks of 4+ flats - **External redecoration** — scaffolding costs alone often push past the limit - **Lift refurbishment** — specialist work with high labour costs - **Window replacement** — particularly in conservation areas with planning requirements - **Major plumbing or electrical works** — communal systems serving multiple units If you're unsure whether your planned works qualify, err on the side of consulting. Running the process unnecessarily costs time but no money. Failing to run it when required costs real money. ## The three stages of Section 20 consultation The Service Charges (Consultation Requirements) (England) Regulations 2003 set out the process in detail. Here is the practical sequence for qualifying works. ### Stage 1: Notice of Intention **What you send:** A written notice to every leaseholder (and any recognised tenants' association) stating: - A general description of the proposed works - The reasons the works are considered necessary - An invitation to make written observations within the consultation period - An invitation to nominate contractors from whom you should obtain an estimate - The address to which nominations and observations should be sent Our notice guide sets out [what each notice must say](/blog/section-20-notice-templates/) in more detail, and our free [Section 20 Notice Generator](/tools/section-20-notice-generator/) drafts the notices for all three stages for you to check before you send them. **Consultation period:** At least 30 days from the date the notice is given. **What you do with responses:** - Record all observations received - If any leaseholder nominates a contractor, you must try to obtain an estimate from a nominated contractor (paragraph 4 of Schedule 4, Part 2 sets out whose nomination to use when there are several) - You must have regard to the observations — this means genuinely considering them, not just filing them **Practical tips:** - Send notices by recorded delivery or hand-deliver with a signed receipt — you need proof of service - Keep a log of every notice sent, the date, and the method of delivery - Start gathering your own estimates during this period — the 30 days is for leaseholders, not for you to wait ### Stage 2: Estimates and inspection **What you do:** Obtain estimates for the proposed works — the statement you send must set out at least two of them, and at least one must be from a person wholly unconnected with the landlord. If you obtained an estimate from a contractor a leaseholder nominated in Stage 1, it must be one of the estimates in that statement. **What leaseholders can do:** Any leaseholder has the right to inspect the estimates and any related documents at a reasonable time and place. You must make these available for inspection. ### Stage 3: Notice of Estimates (Statement of Estimates) **What you send:** A written notice to every leaseholder (and any recognised tenants' association) containing: - At least two estimates for the works - A summary of the observations received in Stage 1 and your response to them - An invitation to make written observations on the estimates within the consultation period - The address to which observations should be sent **Consultation period:** At least 30 days from the date the notice is given. **What you do with responses:** - Record all observations received - You must have regard to these observations before making a final decision on which contractor to appoint - If the contractor you choose is neither a nominated contractor nor the one who submitted the lowest estimate, you must give written reasons within 21 days of entering into the contract ### After Stage 3 Once the Stage 3 consultation period closes and you have considered all observations, you can proceed with the works. Within 21 days of entering into the contract, you must give every leaseholder written notice of your reasons for awarding it, summarising any observations on the estimates and your response — unless the contractor is a nominated person or submitted the lowest estimate, in which case this notice is not required (Schedule 4, Part 2, paragraph 6). ## Timeline: how long does a Section 20 take? The absolute minimum timeline from first notice to starting works: | Stage | Minimum Duration | Running Total | |-------|-----------------|---------------| | Stage 1: Notice of Intention | 30 days | 30 days | | Obtaining estimates | Variable (typically 2-4 weeks) | ~60 days | | Stage 3: Notice of Estimates | 30 days | ~90 days | | Consideration period + contractor appointment | 1-2 weeks | ~100 days | **In practice, expect 3-5 months** from the first notice to starting works. Use our free [Section 20 timeline calculator](/tools/section-20-timeline-calculator/) to map out your statutory deadlines. There is no emergency exemption from the timeline — urgent works need tribunal dispensation (see below) — and "we want to get started quickly" is not urgency. ## Can you avoid a Section 20? In limited circumstances: - **Dispensation from the Tribunal:** Section 20 has no built-in emergency exemption. The only way to recover more than the cap without completing the consultation is dispensation: under section 20ZA(1) the First-tier Tribunal (Property Chamber) may dispense with all or any of the consultation requirements "if satisfied that it is reasonable to dispense with the requirements". Genuinely urgent works — a collapsed ceiling, not a slow leak that has been developing for months — are a typical reason to apply, but it is the tribunal's decision, not the directors', and the application costs time and money. If works cannot wait, do what is needed to make the building safe, record why, and apply promptly. See our guide on how to [apply to the tribunal for dispensation](/blog/section-20-dispensation/). - **Works below the threshold:** If no leaseholder's contribution to the works would be more than £250, no consultation is required (regulation 6). Test the flat with the largest share under the leases, not the average — with unequal shares, the average can be under £250 while one leaseholder's share is over it. For most RTM companies running major works, the answer is: no, you cannot avoid it. Plan the timeline into your project from the start. ## What happens if Section 20 is not followed? If you carry out qualifying works without following the Section 20 process — or if you make errors in the process — the maximum recoverable cost from each leaseholder is capped at **£250**, regardless of the actual cost. For a £40,000 roof repair on a 12-flat block, that means recovering a maximum of £3,000 instead of £40,000. The £37,000 shortfall is the company's problem. Do not assume it can simply be taken from the reserve fund: service charge money is held on trust under section 42 of the Landlord and Tenant Act 1987, and section 20 limits what leaseholders can be required to contribute. The company may need to seek dispensation from the Tribunal, negotiate with contractors, or absorb the unrecoverable cost. This is the single most common compliance failure for volunteer-run blocks. Professional managing agents build the S20 timeline into every major works project. Volunteer directors often don't know the process exists until they're already commissioning quotes. ## Common mistakes RTM directors make 1. **Starting works before the consultation is complete** — the most expensive mistake. Even if leaseholders verbally agree, you must complete the statutory process. 2. **Not keeping records of notices sent** — if a leaseholder later moves to [challenge the service charge at the FTT](/blog/challenge-service-charge-tribunal/), you need to prove every notice was served correctly. 3. **Ignoring nominated contractors** — if a leaseholder nominates a contractor and you don't try to obtain an estimate from them, the consultation may be invalid. 4. **Not responding to observations** — "having regard to" observations is a legal requirement, not a courtesy. Document how you considered each observation. 5. **Forgetting the 21-day rule** — if the contractor you choose is neither a nominated contractor nor the lowest estimate, you must give written reasons within 21 days of signing the contract. 6. **Not consulting on long-term agreements** — the £100/year threshold for contracts over 12 months catches many directors off guard. Insurance contracts, cleaning contracts, and grounds maintenance agreements may all require consultation. ## Practical checklist for RTM directors For a downloadable, pre-flight version of these steps with the legal references, see our [Section 20 consultation requirements checklist](/blog/section-20-requirements-checklist/). - [ ] Confirm whether any leaseholder's share of the works would be more than £250 (check the flat with the largest share under the leases) - [ ] Draft Stage 1 Notice of Intention - [ ] Send to all leaseholders by recorded delivery - [ ] Log dates sent and delivery confirmations - [ ] Wait minimum 30 days for observations and contractor nominations - [ ] Record all observations received - [ ] Obtain estimates and set out at least 2 in the statement (if you obtained one from a nominated contractor, include it) - [ ] Make estimates available for leaseholder inspection - [ ] Draft Stage 3 Notice of Estimates with observation summary - [ ] Send to all leaseholders by recorded delivery - [ ] Wait minimum 30 days for observations on estimates - [ ] Record all observations received - [ ] Select contractor and document your reasons - [ ] If the contractor is neither nominated nor the lowest estimate: send written reasons within 21 days of signing the contract - [ ] Proceed with works ## Sources - Landlord and Tenant Act 1985, Section 20 - Commonhold and Leasehold Reform Act 2002, Section 151 - Service Charges (Consultation Requirements) (England) Regulations 2003 - SI 2003/1987, regulation 6 — the £250 consultation threshold - LEASE — Section 20 Consultation Guidance - First-tier Tribunal (Property Chamber) *This guide is for general information only and does not constitute legal advice. The Section 20 process involves statutory obligations — if you are unsure about any step, seek advice from a qualified solicitor or the Leasehold Advisory Service (LEASE).* ]]>