Professional fees are not “works to a building” for the purposes of Section 20

Professional fees are not “works to a building” for the purposes of Section 20

Many of my readers will be aware that I help run the regular Section 20 workshops for the TPI. One of the questions that regularly comes up in these workshops is the issue of professional fees.

Surveyors’ fees, architects, engineers, consultants, managing agents’ tendering costs. These are the sorts of figures that often sit alongside major works and can run into many thousands of pounds. For years, they have regularly been challenged on the basis that they were not consulted on, with Section 20 being treated as a blunt instrument.

The Case

A recent Upper Tribunal decision has now brought proper clarity.

In Rose v Bracknell Gate Properties Limited, the Tribunal confirmed that professional fees do not amount to “works on a building” and therefore do not fall within the Section 20 consultation requirements.

The case itself arose from three 1930s mansion blocks in Hampstead comprising 25 flats. A leaseholder challenged the payability of a major works demand for electrical works, as well as a reserve fund contribution. The electrical works demand was substantial and included significant professional fees, including architects’ fees of just under £9,000, specification fees of over £12,000, and managing agent fees of around £6,600 for consultation and tendering.

Although Section 20 consultation had been carried out for the electrical works themselves, it had not included these professional fees. The leaseholder argued that this meant the fees should be capped at £250.

At first instance, the First-tier Tribunal rejected that argument and found that professional fees did not fall within the consultation requirements. The leaseholder appealed.

The Upper Tribunal allowed the appeal on a different point altogether. It found that, on the wording of the lease, the service charge demand for the electrical works was not payable because the lease only permitted one annual demand, payable by instalments, rather than separate demands issued on quarter days. That part of the decision is a sharp reminder of how unforgiving lease machinery can be.

However, despite that point being determinative, the Upper Tribunal went on to consider the Section 20 issue as well.

On consultation, the Tribunal agreed with the First-tier Tribunal. The legal background defines qualifying works as “works on a building or any other premises”. The question was whether that phrase extends beyond physical works to include professional services associated with them.

The Tribunal said it does not.

Relying on earlier authority and reinforced by the Supreme Court’s guidance in Daejan v Benson, the Tribunal confirmed that “works” means physical works. Professional fees are advisory in nature and sit outside the statutory consultation regime. To require consultation on professional fees would risk multiple overlapping consultations on a single project, making the process unwieldy and increasing costs for leaseholders themselves.

That reasoning will resonate with anyone who has ever tried to run a major works project in the real world.

The Repercussions 

This does not mean professional fees are beyond challenge. They must still be recoverable under the lease and must still meet the reasonableness test under Section 19 of the 1985 Act. If fees are excessive, unnecessary or poorly scoped, they can and should be scrutinised. But Section 20 is not the mechanism for doing that.

It is also worth remembering that professional fees can still trigger consultation if they arise under a qualifying long-term agreement. One-off fees or fees incurred in connection with a specific project are a different category altogether.

For those of us involved in Section 20 training, this decision is genuinely helpful. It aligns the law with how buildings are actually managed and gives a clear, modern authority to point to when this question inevitably comes up.

The takeaway is simple - Section 20 is about physical works. Paying for expertise to understand a building or plan a solution does not, of itself, trigger statutory consultation. 

That being said one must remain cautious. Professional fees directly connected to a qualifying long term agreement on a recurring basis are, for example, still considered an element of that agreement and are thus subject to the consultation requriements.

If in doubt - get specific legal advice!

Joe Mallon MRICS FTPI