How does the Section 20 Notice impact landlord obligations and insurance?

If you own or manage leasehold property, you will have probably come across a Section 20 Notice at some point. It’s a formal requirement that applies when certain costs are passed onto leaseholders and is often linked to major works or service contracts.

Section 20 is a legal process, but it also affects your UK landlord obligations from an insurance perspective. If not handled properly, it can lead to gaps in cover, disputes over costs and challenges in recovering expenses.

However, how does a Section 20 notice impact landlord obligations and insurance? In this guide, we’ll take a closer look at the insurance side of Section 20, helping you to understand the risks, stay compliant and make sure your cover reflects the work being done.

A Section 20 Notice is a formal consultation process required under the Landlord and Tenant Act 1985. It applies when the cost of certain works or agreements is expected to exceed £250 per leaseholder. The notice makes it so that leaseholders are given advance warning, a chance to comment and transparency around the reasons for the expense.

This typically comes into play for what are known as qualifying works. These are major repairs, maintenance or improvements to the building. It also applies to long-term service agreements that last more than 12 months.

The process is designed to protect leaseholders from unexpected or unreasonable charges. It usually involves three stages. Each stage has set timeframes and requirements:

1. A notice of intention

2. A period for observations and estimates

3. A notification of the chosen contractor

This summary is general guidance only and not legal advice. Always check the latest requirements or speak to a legal professional if you’re unsure.

Landlords must issue a Section 20 Notice when planned works or services will cost their leaseholder more than £250. This often includes large-scale repairs, refurbishments or long-term contracts for things like maintenance or cleaning.

The notice must be sent before any contracts are signed or work begins. This gives leaseholders the chance to review the plans, raise concerns and understand the potential costs involved.

If you work with a managing agent, they’ll usually handle the consultation process on your behalf, but it’s still your responsibility to make sure it’s done properly. Failing to consult correctly could mean you can’t recover the full cost from leaseholders, leaving you out of pocket.

Major works like roof repairs, structural refurbishments or cladding updates can affect your buildings insurance. These types of projects often increase the risk profile of a property, even temporarily.

Insurers might need advance notice before works begin. Depending on the nature of the project, your policy could require updates or there could be exclusions to consider during the works. In some cases, additional insurance for major property works may be required to stay protected.

Let your broker or insurer know as early as possible. That way, your insurance can reflect the planned changes, and you’ll avoid unexpected gaps in cover while work is underway.

If major works go ahead without notifying your insurer with a Section 20, you could face reduced cover or even claim refusal. For example, damage linked to unreported building work might fall outside your policy terms. There’s also the risk of underinsurance if the reinstatement value changes during or after the works.

Beyond cover issues, poor consultation could lead to disputes with leaseholders and damage to your reputation. It’s harder to recover costs if the proper steps weren’t taken, especially when insurance premiums are involved.

Staying on top of your insurance responsibilities during Section 20 works doesn’t need to be complicated. These four proactive steps can help your Section 20 compliance and avoid issues later on:

1. Tell your insurer early: Share plans for major works before anything starts

2. Involve your broker: They can flag potential gaps and recommend any extra cover needed

3. Keep records: Save copies of consultation notices, leaseholder responses and insurance updates

4. Coordinate with agents: If you use a managing agent, make sure they keep all parties informed

The more your insurer and stakeholders know, the smoother the process of getting the right cover in place and recovering potential costs will be.

Brokers play an important role in helping landlords stay insured during major works. They can work with insurers; flag any cover changes needed and support your Section 20 process by aligning insurance with your plans.

By staying proactive and communicating clearly with your broker, your insurer and your leaseholders, you’ll avoid costly surprises and stay protected throughout the process.

Talk to a Everywhen advisor today to review your landlord insurance and make sure you’re covered for every stage of your property’s journey.

If major works go ahead without insurer notification, and those works lead to damage or claims, your policy might not cover it. No matter how many properties you operate, always inform your insurer about qualifying works as early as possible.

Generally, Section 20 doesn’t apply to urgent, or emergency works needed to protect health, safety or prevent damage. However, this can depend on the situation and terms of the lease. Get legal advice for Section 20 landlord insurance if you are unsure.

Depending on the project, extra cover like contract works, non-negligence or public liability insurance might be required for major works. Your broker can help assess the risks.

Managing agents often handle the consultation process and can act as a link between you, leaseholders and your insurer. They help keep records, share updates and ensure key information reaches the right people.

Protecting your investment with landlord insurance from Everywhen can safeguard your property against a host of unforeseen events, providing peace of mind and financial security.

With coverage options that cater specifically to the needs of landlords, including property damage, landlord insurance from Everywhen is designed to support you in keeping your rental venture on solid ground. Explore our landlord insurance solutions and consider how a tailored policy could benefit your property portfolio. Ready to get coverage? Get a quote online or call today.

Buildings insurance is a core part of our landlord insurance policies – and you can get a quote either online or by calling our experts on 0330 808 5687.

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Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.