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

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    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.

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