Right of First Refusal

What is the Right of First Refusal?

If your freeholder/landlord decides to sell, they may have to offer the deal to the residential flat owners before proceeding. If they don’t, the flat owners may have the right to force the buyer to transfer it to them and the freeholder could even be found guilty of a criminal offence; so it’s treated very seriously.

“Thank you Mike for your diligence and ready accessibility; we really appreciated that.” MA

The Right of First Refusal under the Landlord and Tenant Act 1987 (the Act) applies to the disposal of any property (not just a purpose built block of flats):

• which contains at least 2 flats held by qualifying tenants, and
• where more than 50% of the flats in the property are held by qualifying tenants.

If you are the owner of your leasehold flat you will be a qualifying tenant. Where the property being sold comprises a mix of residential flats and business tenants such as offices and shops, the qualifying tenants (but not the business tenants) have the right of first refusal if 50% or more of the internal floor area (excluding common areas such as staircases, landings etc) is in residential use.

However, some properties are exempt. These include properties held by landlords who reside in the property and landlords who are housing authorities.

You need to act quickly

The process is started by the landlord sending a formal offer notice to the flat owners under section 5 of the Act. The residential leaseholders need to act quickly to make a decision. Acceptance of the offer requires a majority of the qualifying tenants to work together, and is subject to a strict timescale, usually 2 months.

“I would like to thank you for your expertise and speed [in the recent matter].” HT

We will guide you through the whole process, from considering your options through to accepting an offer and dealing with the legal process of the transfer.