Block Management for Landlords

Selling the freehold and the “Rights of First Refusal”


Selling the freehold without first offering it to qualifying tenants is a criminal offence. If the landlord sells the freehold without following the legal framework the tenants can take action to force the new owner to sell the interest to them at the price the new owner paid for it.

Where there are two or more flats in a building and the landlord wishes to sell the freehold, a statutory process must be followed known as the ‘Right of First Refusal’, which involves the landlord serving the qualifying tenants with an offer notice. The offer notice is in the form of a Section 5 Notice under the Landlord and Tenant Act 1987 (“the 1987 Act”). The price specified in the Section 5 Notice is non-negotiable so the tenants will have to accept the price if they want to purchase the freehold.

Under the 1987 Act the tenants will have two months from the date of service of the Section 5 Notice to serve an acceptance notice on the landlord.

If the tenants fail to serve an acceptance notice on time the landlord is entitled to sell the freehold to a third party.

However, if the tenants do serve an acceptance notice, a statutory process begins, governed by strict deadlines (which, if not complied with, can leave you open to claims). You will also be unable to dispose of the property other than to the tenants.

At Bolt Burdon we are experts in this area of law and regularly advise our landlord clients on the disposal and the retention of their assets and in accordance with the statutory framework. In an area of law subject to renewed scrutiny it is important to ensure that you obtain advice at the outset.”

Our Your Business Team

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