Section 20 consultations exist to protect leaseholders from large, unexplained service charges. For managing agents the practical question is simpler: when does the duty to consult actually bite? Two thresholds answer most of it, and both are measured per leaseholder, not per block.
The £250 rule: one off works
If planned works will cost any one leaseholder more than £250, you must follow the Section 20 consultation procedure before entering the contract. The test is the contribution, not the contract value: a £40,000 redecoration across a block of forty flats sits at £1,000 per leaseholder and clearly needs consulting on. A £3,000 roof repair across the same block, at £75 each, does not.
The trap is apportionment. Unequal service charge splits mean the threshold can be crossed for some leaseholders and not others. If the largest share exceeds £250, consult.
The £100 rule: qualifying works under a long term agreement
Where works sit under a qualifying long term agreement, such as a maintenance contract lasting more than twelve months, consultation is required if any leaseholder's contribution exceeds £100 in a year. This is the threshold that catches agents out on rolling contracts: regular minor works under a long term agreement can quietly accumulate past it.
What happens if you skip it
- Recoverable costs are capped at £250 per leaseholder for works, £100 for long term agreements, unless a tribunal grants dispensation
- Dispensation is discretionary, slow and never guaranteed
- The shortfall usually lands with the freeholder or the managing agent's client relationship
Practical habits that keep you safe
Price the works before you decide whether to consult, because the threshold is judged on the real contribution. Use contractor quotes that are itemised enough to drop straight into the notice, and keep the estimate stage honest: artificially splitting one project into phases to stay under £250 is exactly what tribunals look for. If in doubt, consult. The cost of a consultation is weeks; the cost of getting it wrong is the cap.