What is right of first refusal in property?
The Landlord and Tenant Act 1987 included the ‘right of first refusal’. It states that where a freeholder of a flat wants to sell the freehold, they must notify the leaseholders and offer them the chance to buy it. Essentially, if there are qualifying tenants residing in the flat, this act stops landlords from selling a property without offering it to the tenant first.
Exemptions from the right of first refusal
The provisions do not apply where:
- The flats are not purpose-built blocks. And there is a resident freeholder who has been living there for at least the last 12 months
- The freeholder is an exempt public sector landlord (this includes local authorities, housing associations, and Housing Action Trusts)
- At least half the internal floor space is used for non-residential purposes
- Preliminary notices having been served. No more than 50 percent of the leaseholders have expressed a wish to exercise the right of first refusal
Who are ‘Qualifying Tenants’?
Qualifying Tenants are tenants who hold their lease directly with the person wanting to sell their property. It’s worth noting that any qualifying tenants who own three or more flats in the same building cannot be Qualifying Tenants.
What happens if a landlord doesn’t comply?
A landlord who does not comply commits a criminal offence and could be subject to a fine on conviction. Also, the court can order a purchaser to transfer the interest in the land to the tenants if the Act was not complied with.
What happens if qualifying tenants don’t offer?
If there are no Qualifying Tenants interested in purchasing the property after 2 months the Landlord can sell the premises. If the Landlord wishes to change the terms, he must first offer to the Qualifying Tenants the new terms.
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