Selling a Freehold – Right of First Refusal

When you’re a leaseholder in a building, it’s often assumed that because someone else owns the freehold, they have carte blanche to do as they please. This is in fact untrue, and as a leaseholder you have many rights. When you have made your home in a leasehold property, you have many rights over the actions of the freeholder, and this is particularly true if the freeholder is thinking about selling the building’s freehold.

If your freeholder is selling the freehold of your block, then you and your fellow leaseholders in a building have what is known as “”the right of first refusal”. This means that if the freeholder wishes to sell, then not only do the leaseholders have the right to buy it – in fact the freeholder has a legal obligation to offer the freehold to the leaseholders first.

In simple terms, this mean that the leaseholders have to be offered the opportunity to buy the freeholder before the landlord starts to negotiate with anyone else. If the freeholder doesn’t do this, then they are committing a criminal offence.

Leaseholders can act only to the freeholder’s offer.

Does the right of first refusal apply to every building?

These rights don’t apply to a single rented house. In order to qualify, the building must:

·         Have less than 50% of non-residential use

·         Have at least two flats

·         Have more than half of the flats held by leaseholders who qualify

Right of First Refusal – What defines a “qualifying leaseholder”?

Many leaseholders have the rights of first refusal, with the exception of those with short-hold or assured tendencies, tenancies which depend on employment, and business tenancies.

In addition, if you hold the leases on three or more flats in a building, you cannot be considered as a qualifying leaseholder.

Starting the right of first refusal process

The start of any right of first refusal process is when the freeholder takes the decision that they wish to sell the freehold to a third party.

Before doing that, the freeholder has to send a formal Office Notice to all leaseholders who qualify, offering them the chance to buy the freehold under their rights of first refusal.

Selling a Freehold- What happens when the freeholder ignores the right of first refusal?

It is a criminal offence for the freeholder to ignore the right of first refusal. If they do sell to someone else, then the leaseholders can serve notice on whoever buys the freehold and demand to see the financial details of the transaction. Then, the leaseholders can force the owner to sell them the freehold at whatever price they paid for it.

Looking for Specialist Advice on the Right of First Refusal? Call us today

It’s so important to get the right legal advice when it comes to Freehold Purchase.

Wherever you live, we can help you. Our team are genuine specialists – freehold purchase and lease extension is all they do.

  • Contact us today for a FREE first phone advice;
  • Call us on FREEPHONE 0800 1404544
    Or use the contact form below

    Comments or questions are welcome.

    * indicates required field