Advice & opinion
There are ways to keep the consultation process
relatively pain-free – but you may need a drink or two!
Ageing is a fact of life. Sagging, wrinkling, cracking, crumbling – and that's just the buildings we live in. When it comes to our
properties, it is quite the done thing to have some work done – but as leaseholders, getting that work done is not always a simple task.
Responsible for stormy meetings and sleepless nights is 'Section 20' – a mystical, mythologised and often misunderstood consultation process about major works.
At heart, this is a very sensible set of rules – to make sure that freeholders, whether individual, joint or part of an RMC, go through five steps:
Establish a need for works which will cost more than a contribution of £250 per leaseholder. Consult with flat owners on the scope of the work needed and invite comments – Notice of Intention. Create a competitive environment for quotes on the work – Notification of Estimates. Select the best quote (NB not necessarily the cheapest) – Notification of Award of Contract. Collect the monies payable and commission the work.
In practice, as recent legal cases around Section 20 have shown (see pages 17 & 18 of this issue for more on the recent decision in Phillips v Francis), this process can create confusion, anxiety, litigation and significant
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costs – either for freeholders who are unable to reclaim the costs of works carried out, or for leaseholders who are obliged to pay potentially very large sums of money for significant programmes of works on which they do not feel they were properly consulted.
So how can you ensure the consultation process is kept as pain-free as possible? As any good dentist will tell you, prevention is better than cure. In an ideal world, prudent RMC boards would draw up schedules of maintenance over the short, medium and long term – everything from painting common parts and mending fences to re-surfacing of paths and roadways, re-roofing of buildings and replacement of lifts.
Armed with a long and detailed 'to-do' list, and guided by some broad estimates of forthcoming costs, directors can then design annual budgets with their managing agents or property advisers which build a reserve fund to cover, or at least to offset, future outlay.
This is all well and good – but times are tight, and flat owners may not support budgets which cover works in the long term but leave them exposed in the short term. I've seen Section 20 consultations from the inside, when sitting on an RMC board, and from the outside as a 'civilian' leaseholder. The view is surprisingly different.
From the inside the preparation for a consultation can (and should) be long and detailed – briefing on the works needed, thought and discussion over scope, timing and
funding options and a decision to take a well- reasoned recommendation to leaseholders. From the outside, the schedule of works and estimate of costs can come as a tremendous surprise and is often greeted with cries of 'but I could do it cheaper myself' and 'somebody's on the make here'.
Advance notice helps reduce the surprise – and also the pain. Flag up the need for works ahead of time – it may not be the most exciting item on your AGM agenda to consider all the expenses which lie ahead, but communicating early and often about future responsibilities can be a great help in getting your fellow leaseholders accustomed to what work will be needed, and giving them a chance to exchange views on appropriate solutions. Perception is 99% of reality – so think carefully about how you set about the process as well as what you do during it.
Aim for an open and competitive process, with a view to the quality of the work you are commissioning as well as the cost. And if during the discussion and planning of works it turns out that the chosen solution may not be the best one – change course.
John Maynard Keynes is said to have observed 'when the information changes, I alter my conclusions'. He also said 'I should have drunk more champagne'. Take heed of both recommendations to help smooth out your consultation process.
Alan Walker is an RMC Director Issue 20
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