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Rights of First Refusal

The Landlord and Tenant Act 1987 (‘the 1987 Act’), gives individual leaseholder’s a right to collectively purchase your freehold with the other Leaseholders in the Building if they have been served with a section 5 Notice.

This is a Notice which states the Landlord’s intention to dispose of their interest in the freehold. If certain criteria are met, it is a criminal offence for a freeholder to sell the freehold of the Building without first offering it to the Leaseholders in the Building.

Do I qualify?

In order to proceed with accepting your Landlord’s offer to sell the freehold to you under section 5 of the 1987 Act, more than 50% of the leaseholder’s in the building will need to take part. Ie if there are 10 flats in the building, 6 of the flats must take part.

Process

In the same way as set out under the 1993 Act freehold purchase, a company will normally be incorporated in order to purchase the freehold and this company is known as ‘the nominee purchaser’. In smaller blocks of flats, the leaseholders may choose to buy the freehold in their individual names.

A section 6 Notice is then served on the Landlord accepting the Landlord’s offer and this must be done within the 2 month deadline provided in the Landlord’s Section 5A Notice. The Leaseholders must also serve what is known as a ‘Nomination Notice’ within a further two months confirming who will be buying the freehold so this may either be the individual names of the leaseholders or the Nominee Purchaser company.
Unlike the 1993 Act, there is no room for negotiations on the premium or the terms of the freehold purchase in this case. The terms and premium are set out in the section 5A Notice and the Leaseholders must accept these terms if they wish to proceed with the purchase.

The process above will differ slightly depending on whether a section 5A/B/C Notice is served on you and Arcadia Law have experience in dealing with all of these Notices.

If you are a Freeholder and wish to sell your freehold interest, we can help you with preparing and serving a Notice on the Leaseholders and will be able to advise you as to which Notice is best suited to your circumstances.

Collective Enfranchisement
Collective Enfranchisement
Missing landlord
Missing landlord

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