If there’s one number every leaseholder in England and Wales needs to have locked in their memory, it’s £250. This isn’t arbitrary. It’s the threshold at which one of your most powerful legal protections kicks in — the Section 20 consultation requirement under the Landlord and Tenant Act 1985. Understanding what this threshold means, how it applies, and what happens when it’s breached could save you thousands of pounds.
What Is the £250 Rule?
Section 20 of the Landlord and Tenant Act 1985, as amended by the Commonhold and Leasehold Reform Act 2002, requires your freeholder to follow a formal consultation process before carrying out “qualifying works” — works that will cost any individual leaseholder more than £250.
The key phrase is “any individual leaseholder.” It’s not the total cost of the works that triggers the requirement — it’s what any one leaseholder would pay. So even on a large block where the total cost is shared across fifty leaseholders, if any individual would pay more than £250, the consultation requirement applies.
What Counts Towards the £250?
The £250 refers to the service charge contribution attributable to the specific works, not the total contract value. If your building has twenty leaseholders each paying 5% of service charges, and the total works cost £9,000, each leaseholder’s share is £450 — which exceeds £250 and therefore triggers the consultation requirement.
The threshold applies to each set of “qualifying works” separately. Freeholders cannot artificially split a single project into multiple smaller packages each costing under £250 per leaseholder to avoid the consultation requirement. Courts and tribunals have consistently found such “salami-slicing” to be an avoidance of the statutory requirements.
Why Does This Threshold Matter So Much?
Because if the freeholder carries out qualifying works without following the Section 20 consultation process correctly, the law limits what they can recover through the service charge to — you guessed it — £250 per leaseholder.
This is the key legal consequence. A freeholder who fails to consult is faced with the prospect of recovering only £5,000 total from twenty leaseholders (£250 × 20) for works that actually cost £60,000. The remaining £55,000 falls on the freeholder.
This is a powerful deterrent — in theory. In practice, it also drives freeholders to apply to the First-tier Tribunal for “dispensation” — an order excusing compliance — and the tribunal has discretion to grant dispensation where it considers it reasonable to do so.
The Long-Term Agreements Threshold: £100
There’s a related threshold that fewer leaseholders know about. The Section 20 consultation requirement also applies to “qualifying long-term agreements” — contracts for services or works that last more than twelve months — but at a lower threshold of £100 per leaseholder per year.
This applies, for example, to a management contract lasting more than one year where the annual cost per leaseholder exceeds £100. Given that management fees routinely cost several hundred pounds per leaseholder per year, this threshold is triggered in most managed blocks — meaning the freeholder’s management contract itself should have been subject to Section 20 consultation when it was entered into.
In practice, many managing agents entered into long-term contracts without following this consultation process, and leaseholders are often unaware they have grounds to challenge.
How to Check If the £250 Threshold Has Been Met
When you receive a Section 20 notice or a major works demand, check:
- What is the total cost of the works?
- What percentage of the service charge does your lease say you’re responsible for?
- Multiply: total cost × your percentage = your share
- If your share exceeds £250, the Section 20 consultation was legally required
If you don’t know your service charge percentage, it should be stated clearly in your lease — typically in a schedule or an early clause dealing with service charge contributions.
What If No Consultation Notice Was Served?
If works costing more than £250 per leaseholder were carried out without any Section 20 consultation, and you have evidence of this (or simply never received any notices), you should:
- Confirm when the works were done and what they cost
- Calculate your share and verify it exceeds £250
- Write to your freeholder asking why no Section 20 consultation was carried out
- If the answer is unsatisfactory, consider applying to the First-tier Tribunal to challenge the service charge on grounds that the costs were not reasonably incurred (given the failure to consult) and/or to contest any dispensation application
Remember: the £250 rule is your starting point. Even if consultation was properly conducted, you can still challenge the costs as unreasonable under Section 19. The two protections work together.
Think your bill might be inflated? Get an independent assessment from Section20.org.uk — 48-hour turnaround, fixed fee. Email info@rapidqs.uk, WhatsApp us at +44 7438 628277 (5-minute response guaranteed), or fill in our contact form at section20.org.uk