If you decide to sell, develop or ‘deal’ with your building containing residential flats, you need to be sure you aren’t caught out by legislation designed to protect the existing leasehold flat owners. If you own the freehold or superior lease of a residential or mixed use block, it is essential to check whether your tenants’ have the ‘right of first refusal’ under the Landlord and Tenant Act 1987.
“Thank you Mike and Chelsey for your diligence and ready accessibility; we really appreciated that.” MA, August 2018
Why is this important?
The Right of First Refusal may require you to offer the terms of a proposed dealing to the leaseholders before you proceed. If you don’t, the leaseholders could potentially force the transaction to be unravelled, so that they can take the benefit of it. You could even be found guilty of a criminal offence.
Does it apply to all buildings?
No, it applies to buildings with residential use and some mixed use buildings. Each building needs to be assessed.
What is a ‘dealing’?
Many people acknowledge this right applies to a sale of the freehold. However, it is vital to remember that it also applies to many other transactions, including a sale of a headlease which is superior to the flat leases, and the grant of certain other leases, such as a lease to a developer to construct a new penthouse storey.
The good news is that complying with the obligations to offer the terms to the leaseholders is not too onerous, but it usually leads to a delay while the leaseholders are given time to decide whether or not to accept the offer.
“I would like to thank you for your expertise and speed [in the recent matter].” HT, November 2018
Buying the Freehold Solicitors
We have considerable experience in acting for landlords who find themselves in this situation, from advising on your options through to making an offer to the leaseholders and dealing with the legal process of the transfer.