Your Guide To Major Works
13th Sep 2018
‘Major works’ and the cost associated with them can be daunting for leaseholders, so it helps to know the process involved, the responsibilities of the freeholder, and what options are available to you.
What are Major Works?
‘Major works’ are one-off repairs, maintenance or improvements to your building, communal areas or estate i.e. roof renewal or resurfacing a car park. If a ‘reserve fund’ is available, then this may cover some or all of the ‘major works’ required. Freeholders are required to consult with all of the leaseholders under Section 20 of the Landlord and Tenant Act 1985, if the proposed works will cost individual fees of more than £250.
What is Section 20 Consultation?
The consultation process is a legal procedure that involves informing leaseholders of proposed works, allowing them to raise any concerns about the work or it’s costs. There are three stages involved within the Section 20 consultation process:
- Notice of Intention – this will describe the works proposed and why they will be necessary, as well as inviting you to make observations in writing within 30 days, and informing all leaseholders of their right to nominate a contractor.
- Notification of Estimates – this includes the details of at least two estimated costs of the work to be carried out and any observations made by the leaseholders, including their proposed contractors. Leaseholders will be given a further 30 days to comment.
- Notification of Award of Contract – this is a notice given within 21 days of entering the contract, explaining the choice of the chosen contractor and a summary of the leaseholders observations regarding the estimates.
This process may differ slightly if there are contractors already in place under a ‘qualifying long-term agreement’ that has already been previously agreed to by the leaseholders.
Payment for Major Works
The charges incurred as a result of ‘major works’ form part of leasehold service charges, but are usually paid for via additional payments. Due to the financial impact that ‘major works’ charges can cause, freeholders have the option to set up reserve/’sinking’ funds that leaseholders pay into annually to help prevent sudden demands for hug sums of money. Freeholders should also give as much notice as possible of proposed work, however, they legally cannot recover service charge costs incurred more than 18 months before they formally ask you to pay for them. The timing of invoices related to ‘major works’ can be payable in advance or arrears depending on the lease terms, although the actual costs will normally not be known until the work is complete. Payment options will vary depending on your personal circumstances.
Hopefully this guide has helped you to understand the processes involved surrounding ‘major works’ however if you still feel unsure on any areas, please feel free to contact a member of the Blocsphere team!