Freeholder wants to sell freehold
Understanding your rights as a leaseholder. If your freeholder is selling the freehold, you have the first right to purchase. Understand your legal rights and the steps involved under the Landlord and Tenant Act 1987, as amended by the Housing Act 1996.
Can a freeholder refuse to sell the freehold?
Under the Landlord and Tenant Act 1987, as amended by the Housing Act 1996, the freeholder is legally obligated to offer the freehold to existing leaseholders before selling it on the open market. This provision, known as 'The Right of First Refusal,' ensures that you, the leaseholder, have the first opportunity to purchase the freehold. The freeholder cannot refuse to sell it to leaseholders if the legal process is followed correctly and the leaseholders express a desire to purchase.
Freeholder selling freehold: what you need to know
When a freeholder decides to sell the freehold, they must issue a Section 5 notice to all leaseholders, informing them of the sale and the terms. This notice marks the beginning of a critical period during which you can accept the offer and nominate a purchaser among the leaseholders. This process ensures that the freeholder selling freehold rights respects your right of first refusal, allowing you to potentially control the management of the property directly.
Selling freehold to leaseholders
The enfranchisement process
- Instruct a Solicitor: Start by drawing up a participation agreement with a solicitor to ensure your rights are protected.
- Instruct a Surveyor: Obtain a valuation from a surveyor to determine a fair price for the freehold.
- Serve a Section 42 Notice: Your solicitor will serve a Section 42 notice to formally initiate your intent to purchase the freehold.
- Negotiation Phase: Your surveyor will negotiate with the freeholder to settle on a reasonable premium.
- Legal Finalisation: If a price is not agreed upon within 6 months from the date of the Section 42 Notice, you have the option to bring the matter before the First Tier Tribunal. Once terms are agreed, there is a 4-month window to finalise the transaction.
Note: Full Act
The Leasehold Reform, Housing and Urban Development Act 1993 further supports your rights, stating that leaseholders can buy the freehold as long as they represent at least 50% of the qualifying tenants and the original lease was set for more than 21 years.
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