Buying and selling a leasehold flat can be a long and tiresome process because of the lease conditions. Ground rent over £250, short leases and flats with a section 20 notice can cause considerable stress, and delays when trying to purchase one.
In this article, we look at what section 20 works are and mean for a leasehold flat, objecting to a section 20 notice, and whether you should still proceed in buying a flat that has this served on the property.
What Are Section 20 Works?
A section 20 notice of the landlord and tenant act is served by the landlord when there are major works or maintenance that need to be undertaken on the leasehold property. Alternatively, it can be served if the landlord wants to enter into a long term agreement to check fire alarms, control system doors etc.
A section 20 notice is usually served in addition to your annual service charge, these are works that haven’t been budgeted, and cannot be covered by the sinking fund that the landlord should hold from all leaseholders.
Objecting To A Section 20 Notice
When a section 20 notice is served by the landlord, they are required to provide you with a full spec of the outlined works and quotes of who they are going with.
All leaseholders then usually have a month to respond to this notification and can nominate alternative contractors, and also ask for evidence that the work is required.
It’s worthwhile to get a few contractors around to advise, look at the job and get some quotes. You should also run due diligence on the freeholder, the management company and all the companies under other names.
If the landlord fails to provide this information, submit a request to view all invoices, receipts and copy of accounts.
You must put this request to them in writing so there is a paper trail with dates. If they then fail to provide you with all of this information and you have all the evidence that demonstrates that the agents are not doing their job very well, over charging, charging for unreasonable expenses etc, you can take them to a first-tier tribunal.
However, you do need to make sure that you’ve got everything in writing and strong evidence to form your case. If all leaseholders can join together this makes a much stronger case, you should also consult a leasehold solicitor before acting on this.
Should I Buy A Flat With A Section 20 Notice
A section 20 notice is not something that you should openly buy into without knowing the background information.
A section 20 notice is not always bad if it’s one that has been served as a long term agreement, however, there have been occasions when solicitors have advised that because it’s a long term agreement with contractors for the maintenance and repairs of the building/grounds, that major works and high costs aren’t involved. These individuals have then become owners of the properties to find that they have been served an estimate of works into the region of tens of thousands of pounds. None of which was mentioned during the legal process.
If you’re in the process of buying a flat with a section 20 notice you need to know everything to what it relates to. The ideal situation will be for the current leaseholder to pay it upfront, if they want the sale to go though. Or, you should ask to renegotiate the price based on the costings for the section 20 notice.
It can also cause issues with your mortgage lender, many will not lend if there is an outstanding section 20 notice as it can affect your affordability.
If you love the flat and choose to accept the section 20 notice, you are unlikely to see any increase in property value following the works, so paying the full cost for the works and any renovation costs you might carry out is only going to cost you your investment.
All other potential buyers will be faced with the same issues, the sellers are not going to get a better offer elsewhere so asking about a re-negotiation on the buying price might work.
From my own personal experience with owning a leasehold flat, I would avoid anything that has section 20 written all over it as it will only be trouble, and more money from the start.
You should also carry out your own due diligence on the landlord and managing agent in advance, as your solicitors will not do this. This is a really important part of buying a leasehold property as there are so many different parties involved.
Always consult a solicitor for legal advice, the National Leasehold Campaign Facebook group is also a wealth of real, personal experience with those owning and buying leasehold property.