Taking Action When Your Landlord Decides to Sell the Freehold: A Guide for Tenants

You recently got a letter in the mail from your landlord stating that he is serving a Section 5 Notice and plans to sell the freehold of your building, making you an offer. You know deep down that you should investigate your choices, but where do you begin, and what exactly is section 5?

Don’t worry: we’ve got the answers and next steps you need.

For more queries related to the length of the remaining lease and how much any lease extension may cost, have a lease extension valuation valuation undertaken by an expert lease extension valuer.

What is a section 5 notice?

A Section 5 Notice is issued to eligible tenants (also known as building or property leaseholders) informing them that the landlord intends to sell the property’s freehold.

The Landlord and Tenant Act of 1987 imposes a legal requirement known as the Right of First Refusal, which requires landlords to deliver the notice to leaseholders before selling the freehold interest on the market. Failure to comply is a criminal offense.

Section 5 notices (5a, 5b, 5c, 5d) are used in a variety of situations, including when the freeholder wants to sell the freehold at an auction. However, the procedure is similar for both.

Leaseholders presented with a section 5 notice must first determine how long they have to accept, but leaseholders should be allowed at least two months to make a decision. If they are satisfied with both the price and the terms of the acquisition, they must go via a formal procedure, beginning with serving an acceptance notice on the freeholder, which must be provided by a majority of the eligible tenants.

What does a right of first refusal mean for tenants?

The first step is to recognize that this is a once-in-a-lifetime opportunity.

The Freeholder is selling their estate either to an unknown buyer, such as a developer or at an auction.

According to UK law, as a leaseholder, you have the right of first refusal and can purchase your freehold if you so desire.


It is not easy to exercise your right. You must do the following:

  • Determine who will lead the process.
  • Collaborate with at least 50% of the apartment owners in your building.
  • Determine the financial viability of purchasing the freehold at the offered price.
  • Determine the finance arrangement.
  • Nominate or form a purchaser (typically a limited company) before accepting the offer in the proper legal form.

And you only have two months or fewer to complete all of this.

You must then collect the funds and complete the transaction.

Does that seem intimidating? Don’t give up!

Unlike a Collective Enfranchisement claim, you do not need to bargain over the price with this take-it-or-leave-it offer.

It is critical to be well-organized and cohesive.

Specific aspects of the procedure can be assisted by experts.

  • Engage a trained surveyor to evaluate the freehold’s market worth. If the offer price is less than market value, you can focus your efforts on convincing leaseholders to accept it.
  • There are numerous excellent solicitors available to handle the necessary legal and conveyancing procedures. Look for someone with suitable experience.

Alternatively, you can hire an expert to mentor you and manage the entire process from start to finish, generally at a reduced cost.

Profit from the advantages that come with owning a freehold, such as:. Modernize your leases, optimize building management, and prioritize those works, repairs, and improvements. All of this will add genuine value to your flats and free up your time to focus on what matters most – your life.

Leasehold Valuation specializes in leasehold valuations, lease extensions, enfranchisement. Have a quick 10-minute free consultation with one of our RICS experts.

Unveiling Three Hidden Problems With Share Of Freehold: What Homeowners Should Know

A flat or apartment leaseholder can also own a share of the freehold of their entire building, in addition to a lease on their individual flat. This is referred to as a share of freehold.

Because buying the freehold of a flat is not possible on an individual basis, flat or apartment leaseholders instead have the option to own a share of the building’s freehold by joining the collective group that wants to take over the freehold of the property. This process is known as collective enfranchisement. A collective enfranchisement occurs when a group of leaseholders band together to take control of the freehold of their building.

If you are looking for a lease extension in the UK, contact us for assistance. Our team of chartered surveyors can help you successfully negotiate your lease extensions or enfranchisement. Give us a call for a consultation today

A new leaseholder who buys a unit with a share of freehold becomes a shareholder in
the company that owns the freehold of the building. They control the freehold and the
management of the building. The apartments and flats in the building are still leaseholds, but as
members of the freehold company, they have a vote in how the building is
managed, can instruct contractors, can prioritize work, and manage
their service charges. Their leases are typically extended for
999 years.

What are the Responsibilities of a Freehold Shareholder?

The collective freehold shareholders, or freehold owners, are responsible for the
building and its land’s maintenance. This involves obligations such as ensuring that lifts, stairways, and halls comply with health and safety laws, instructing on repairs, and staying up to date on ever-changing property legislation. They have control over the money, what work is done, and how it is prioritized. Many buildings (or collectives) hire a managing agent to handle this for them.

What is a Managing Agent?

A managing agent's tasks include tendering contracts for work to be done, collecting service charges, coordinating payments for any work done on the building, and developing budgets for anticipated building work.

What are the Benefits of Buying a Freehold?

You may be considering forming a collective with the other leaseholders in your block. Though it may appear to be a daunting process, it is not, and there are numerous advantages to purchasing your freehold outright, including:

● Increasing the value of your home
● Complete control over the building’s maintenance.
● Taking complete control of the management
● The ability to obtain more extensive or affordable insurance policies
● Though a freehold purchase will provide some or all of these benefits, owning a part of a freehold has some drawbacks.

Key Problems with Buying a Share of Freehold

1) Shared Management – Purchasing a freehold share is not the same as purchasing a freehold dwelling. When you buy a freehold residence, you have ultimate authority over everything that happens to your property. You get to make all decisions about what gets done and what doesn't. When you just own a portion of a freehold, decisions are taken jointly with the other freehold owners.

This means that your co-owners (shareholders) may be able to make decisions that impact your property. However, if you did not own a share of the freehold, you would be in a worse position because you would have little/no say in these decisions.

This small issues with owning a freehold share, but they are not insurmountable. Whilst all freehold shareholders may not agree on everything, at least they all have a say. Because of the complexities of this and other issues, we recommend seeking professional advice before purchasing a freehold.

2) Lack of Expertise – It is critical that all freeholders have a good awareness of Landlord and Tenant rules, or have selected a representative who does, to guarantee the building maintenance and upkeep responsibilities, as well as health and safety legislation, are met. A lack of knowledge in these areas may result in building deterioration, as well as disgruntled or vulnerable individuals living in potentially hazardous surroundings. Failure to comply with legislation may also result in criminal prosecution, as well as penalties or even jail, which is why we always recommend that you obtain professional advice before purchasing a share of the freehold.

3) Cost of purchasing the freehold – It can sometimes be very expensive to purchase the freehold. This is because the freehold will include any flats which are owned by the current freeholder, porter flats (or other staff flats), storage cupboards, land, car park etc. Therefore, the cost can quite easily become prohibitive.

Buying the freehold of your property could be very beneficial. However, the process involved in purchasing your freehold is complex and confusing. Leasehold Valuations will guide you and advise you of your best options Feel free to call us at 01753 542984 for a free 10-minute consultation.

Free Consultation

Call 01753 542984 for a FREE 10 minute consultation on your lease
extension or freehold purchase.

Leasehold Valuations

Grab Your FREE Consultation with Leasehold Valuations

We could save you £XXX. Why not have a free 10 minute consultation?