Leasehold glossary

What is dispensation from Section 20 consultation?

Dispensation, under Section 20ZA of the Landlord and Tenant Act 1985, is where the First-tier Tribunal excuses a landlord who failed to consult properly on major works. Following the Supreme Court in Daejan v Benson, the key question is whether the leaseholders suffered relevant prejudice; if not, dispensation is likely to be granted.

When a landlord carries out major works, it normally has to follow the Section 20 consultation procedure. If it does not, the amount it can recover from each leaseholder is capped — at £250 per leaseholder for qualifying works (or £100 per year for a qualifying long-term agreement). That cap can be devastating for a landlord facing, say, a £40,000 roof bill across a small block.

Dispensation is the safety valve. Section 20ZA of the Landlord and Tenant Act 1985 lets the First-tier Tribunal "dispense with" the consultation requirements where it is reasonable to do so. If the tribunal grants dispensation, the £250 / £100 cap falls away and the landlord can recover the full (reasonable) cost.

The test: relevant prejudice

The leading authority is the Supreme Court decision in Daejan Investments Ltd v Benson [2013] UKSC 14. It reframed how tribunals approach dispensation. The key question is no longer whether the landlord's breach was serious in the abstract, but whether the leaseholders suffered relevant prejudice as a result of the failure to consult — in other words, were they actually worse off than they would have been if consultation had been done properly?

  • If the leaseholders suffered no relevant prejudice, dispensation is likely to be granted.
  • Where there was prejudice, the tribunal can grant dispensation on conditions — for example requiring the landlord to reduce the sum, or to pay the leaseholders' costs of the dispensation application.
  • The onus is on leaseholders to identify what they would have done differently had they been consulted.
Important limit: dispensation only forgives the consultation failure. It does not make the cost reasonable. Even if dispensation is granted, the amount still has to pass the Section 19 reasonableness test — so you can still challenge whether the works were needed, well procured and fairly priced.

What this means for you

If your landlord skipped or botched consultation, do not assume you automatically only owe £250. The landlord can apply for dispensation, and after Daejan they will often get it if you were not genuinely prejudiced. The productive move is usually not to fight the dispensation on a technicality, but to focus on real prejudice (were cheaper contractors shut out? was scope inflated?) and on the underlying reasonableness of the bill.

Dispensation cases turn on evidence. Showing the tribunal exactly how a proper consultation might have changed the outcome — or that the price is out of line with comparable works — is where a careful, document-led analysis pays off.

How this shows up in your service charges

A big major-works bill with shaky consultation is one of the most common — and most costly — service-charge disputes. Our free AI audit reads your demand, accounts and lease and shows you, line by line, how much could be challengeable under the Landlord and Tenant Act 1985, including where consultation and reasonableness give you room to push back.

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