Major works and long term contracts

 

As a leaseholder, you have to pay a service charge, which covers your share of the costs of maintaining the communal areas and the exterior of the building. Apart from that, we occasionally need to carry out works which cost a considerable sum of money. 

Examples of works which can prove expensive include:

  • Cyclical maintenance and decoration works - for example: repainting communal areas, replacing worn carpets and installing new ceiling tiles.
  • Window frame replacement.
  • Works which require scaffolding - scaffolding is expensive to hire and erect.
  • Roof repairs.
  • Installing new communal equipment such as a lift or fire detention system.

Whenever we plan major works or are planning to enter a long-term contract, we need to carry out a legal consultation process called Section 20. We will need to do this whenever:

  • the planned works will cost at least one leaseholder in the development more than £250,
  • we wish to enter into a long term agreement, which will cost at least one leaseholder in a development over a £100 a year.

Examples of contracts which could trigger Section 20 consultation include:

  • lift servicing and maintenance,
  • annual fire risk assessments of the communal areas,
  • fire alarm maintenance,
  • cleaning and gardening.

The Section 20 consultation is there to make sure you are involved in the process and have the chance to ask us questions and make comments.  If you wish, you can even nominate your own contractor to carry out the works or take on the contract.

 

Exceptions to the Section 20 consultation process

There are a couple of reasons why Origin may not be able to follow the Section 20 process. These are:

  • The likely cost of the works or contract means that the works / contract must be tendered via a public notice in the Official Journal of the European Union.
  • The works / contract are urgent and there is not time to wait for the full Section 20 consultation process to be carried out before commencing.

 

Paying for the works - sinking fund

The cost of works and long term agreements are charged back to you through your service charge. To cover the cost of major works, leaseholders also pay toward a 'sinking fund' as a part of their service charge. This is a fund which builds over time to deflect the costs of major works. 

If the sinking fund is not sufficient to cover the cost of works, we will charge you the remainder of the costs through your service charge.