Section 20 notice will be issued but no further detail available yet. What to do?

okigen

Hello, I'm buying a share of freehold in a block of 15 flats. The management pack say there will be a section 20 notice of intention at the end of the year for "internal repairs and redecoration", but there is no further detail available at this point. They have a reserve of 7k, but again not known whether this will be enough as there is no estimate for the cost yet.

Homebuyer report says there is a crack on one of the texture walls near the hall, although it's cosmetic. Other than that I didn't notice any big problem when doing the viewing.

What do people think? Is there any question I should raise?

tacpot12

You could ask what the repairs are, but for small repairs and regular redecoration, I doubt they will use the reserve. The reserve is 'reserved' for major works such as replacing the roof.

bouicca21

At this stage the management company don’t know what the cost will be.  After they issue the section 20 they will get quotes.  Why not ask for a guesstimate?  I did that when I recently went through a section 20 process.  Property manager was happy to give me a rough idea of what he expected it to be.  He was pretty nearly spot on, too.

NameUnavailable

Internal redecoration is probably mentioned in the lease, i.e. it must be redecorated every 5 years or something like that, so it's most likely 'regular' maintenance.

Check what the lease says, if it's not clear ask the management company (via your solicitors) for clarification - they may not have estimates yet but they can tell you what work they intend doing, i.e. repainting, filling plaster cracks etc., or is it more involved like replastering walls, fitting new flooring, new doors/lighting etc.

eddddy

It's likely that you won't be able to get too much definitive information on this at this stage - you'd probably have to rely on whatever info you can gather, and make your own assessment.

A section 20 consultation is required if a leaseholder's contribution is over £250 - so at one end of the spectrum, your contribution might only be £300 or £400.


But, let's say you suspect it will be £1000, your options include:

• Reducing your offer by £500 (to split the cost), or by £1000, or by £2000 (to cover the worst case), etc

• Arranging a larger than normal 'retention' - i.e. the solicitor holds back, say, £2000 of your purchase money - and uses it to pay the section 20 costs. Any money that's left over goes to the seller.

AdrianC

That's what the initial s20 is...

"We think this will be over £250/leaseholder, but we don't know yet. We will be getting more details."

I've had a couple for a flat we let, and they've come back to being coverable by the sinking fund - nothing extra to pay. But, of course, the service charge has risen steeply because of various costs that don't need an s20...