Section 20B notifications
You may have received a letter from us advising you of a Section 20B notification.
Why have I received this letter?
Your building and/or estate has benefitted from a scheme of works. We are unable to send you a final account invoice (demand for payment) and so you are therefore being made aware of relevant costs incurred to your building or estate to date. As a leaseholder, you will know that you will have to contribute towards the cost of these works.
What is a Section 20B notification?
Under Section 20B of the Landlord and Tenant Act 1985, a landlord has 18 months within which to notify you of service charge costs being incurred or demand payment from you. As final costs have not yet been billed, this letter is notifying you of costs incurred to date and that you will be required to contribute towards the incurred costs.
What is an ‘incurred cost’?
Since works began on your building and/or estate, money has been spent in respect of materials and labour. Contractors submit their invoices each month to Lambeth in respect of expenses they have incurred and Lambeth pay the contractor on the basis of the invoice receipted. The incurred cost noted on the Section 20B notification is made up of materials, labour and fees.
What do you mean when you say I have ‘to contribute towards the cost of these works’?
As leaseholder, you will subsequently be required under the terms of your lease to contribute your proportion of these costs by the payment of a service charge. The incurred cost noted in the Section 20B notification is in relation to your building or estate. We calculate your apportionment of incurred cost using the rateable value method. For more information, visit major works calculations.
Combined block or estate rateable value
Each property has a rateable value and you will be expected to pay your apportion of costs incurred to your building or estate.
Will this cost change?
Your apportioned contribution will change when we serve you with the final account invoice. This is because the cost noted on the Section 20B notification is inclusive of both rechargeable and non-rechargeable expenditure incurred by the London Borough of Lambeth to date. The final account invoice will not include any non-rechargeable items of work and so your proportion of the cost may decrease. However, if at the time of the Section 20B notification the scheme is still in progress and further materials and/or labour is required, the cost noted may increase in value. Once the final costs are agreed, we can provide you with your final account invoice and summary of expenditure to your building and/or estate.
Will my service charge account be amended because of the Section 20B notification?
No. The Section 20B notification does not adjust the balance requested on the estimated invoice nor is it an additional invoice that requires payment. Once the final account has been received, a final invoice will be issued for the works that were carried out to your property. This figure may be higher or indeed lower than the sum quoted in your Section 20B notification. When the invoice is issued a breakdown of works will be attached, but a justification for any increase or reduction will not be included. If your require this information, it will be available on request.
When will you send me a final invoice?
The final account for the scheme of works will be prepared when the contract is finished and full costs are confirmed. You will be notified of the actual contract costs and therefore your actual contribution when the final account is agreed. You will be provided with a summary of expenditure and your account will be adjusted to reflect any increase or decrease in charges. To get an update of when you are likely to receive your final invoice please email HMhomeownership@lambeth.gov.uk