Buying or selling a flat with a Section 20 notice: who pays for the works?

In England and Wales, Section 20 is a service-charge consultation rule under the Landlord and Tenant Act 1985, not a special conveyancing rule that automatically splits a bill between seller and buyer. The practical question is usually not who owned the flat when the works were planned, but who owns it when the service charge is formally demanded.

Who pays for major works when a flat is sold during a Section 20 consultation?

Liability for Section 20 major works follows whoever owns the flat when the service charge is formally demanded: a demand already due and unpaid before completion stays with the seller, while a final demand raised after completion usually falls on the buyer. Section 20 itself defines the recoverable “relevant contribution” as the amount a tenant may have to pay under the lease, because it says that a “relevant contribution” is “the amount which he may be required under the terms of his lease to contribute”; the Act also states, “This Act extends to England and Wales.” That timing rule is why buying a flat with a Section 20 notice is different from buying after the final demand: selling a flat with a Section 20 consultation still open does not, by itself, leave the seller liable for a future bill. Between seller and buyer, the contract may apportion outgoings or provide a retention, but the freeholder or management company normally pursues the leaseholder liable when the charge falls due.

Should you buy a flat with a Section 20 notice already served, and should the price come down?

You can buy a flat with a Section 20 notice already served, but the price reduction is a negotiating point rather than a legal entitlement, especially where the final cost is not yet known. Section 20 does not ban a sale or require a discount; it limits recoverable service-charge contributions unless the consultation rules are met, and it describes the contribution as the amount payable “under the terms of his lease.” Some conveyancing commentary says, “It is standard practice to reduce the purchase price by up to the full cost for which you will become liable,” while other market commentary says an upcoming levy is “a service-charge cost that the buyer will have to pay after completion, not a price reduction the seller should fund.” The safest offer treats the open Section 20 notice as a risk item: ask for the estimates, consultation stage, reserve-fund position and managing-agent answers, then negotiate a price reduction or solicitor’s retention if the seller will agree.

The service charge turned out far higher than the sale particulars said - can you pull out and get your deposit back?

Before exchange you can usually pull out if the service charge is far higher than the sale particulars said, but after exchange or at auction you should assume the deposit is at risk unless you can prove a misrepresentation or obtain a discretionary court order. GOV.UK states, “An offer is not legally binding in England and Wales until you exchange contracts,” but also warns, “If you withdraw from the agreement after exchange you may lose your deposit and have to pay compensation to the seller for other losses.” A wrong annual service charge in particulars may support a misrepresentation claim if it induced the purchase: the Misrepresentation Act 1967 imposes liability where a person enters a contract after a misrepresentation and suffers loss, unless the maker proves reasonable belief in its truth. The court can also repay a deposit because section 49 of the Law of Property Act 1925 says it “may, if it thinks fit, order the repayment of any deposit.” A non-refundable auction deposit is therefore not automatically lost, but recovering it is a legal claim, not a cancellation button.

Last reviewed August 2026.

Sources

• Landlord and Tenant Act 1985 s.20 — “In this section ‘relevant contribution’, in relation to a tenant and any works or agreement, is the amount which he may be required under the terms of his lease to contribute (by the payment of service charges) to relevant costs incurred on carrying out the works or under the agreement.” Source
• Landlord and Tenant Act 1985 s.40 — “This Act extends to England and Wales.” Source
• KDL Law, leaseholders selling with unpaid service charges — “The owner at the time that the charges are due is the only party liable to pay those charges.” Source
• Ola Leslie Solicitors, conveyancing service-charge apportionments and retentions — “This includes the service charges even if they were incurred before your ownership.” Source
• Law Society Standard Conditions of Sale, 5th edition — “On evidence of proper payment being made, income and outgoings of the property are to be apportioned between the parties so far as the change of ownership on completion will affect entitlement to receive or liability to pay them.” Source
• SAM Conveyancing, buying a flat with a Section 20 notice — “It is standard practice to reduce the purchase price by up to the full cost for which you will become liable.” Source
• Sell Flat UK, responding to a buyer’s survey on a leasehold flat — “Either way, an upcoming Section 20 levy is a service-charge cost that the buyer will have to pay after completion, not a price reduction the seller should fund.” Source
• GOV.UK, making an offer when buying a home — “An offer is not legally binding in England and Wales until you exchange contracts.” Source
• GOV.UK, How to buy a home — “If you withdraw from the agreement after exchange you may lose your deposit and have to pay compensation to the seller for other losses.” Source
• Misrepresentation Act 1967 s.2 — “Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true.” Source
• Law of Property Act 1925 s.49 — “Where the court refuses to grant specific performance of a contract, or in any action for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit.” Source