Selling a freehold property and serving notices to leaseholders can be costly, stressful and time consuming, which is why we offer hassle-free, low or zero cost solutions to help you save money. We have extensive experience in preparing and serving Section 5A and 5B notices on behalf of our clients. So, whether you’re selling your freehold privately or at auction, we can assist you in complying with your legal obligation to offer the Right of First Refusal to qualifying tenants (leaseholders) in your building.
Our Right of First Refusal Notice service is fast and efficient. In most cases, we can prepare and serve the notices within 24-hours, subject to having access to the leases and title information. When serving notice, we retain all postage receipts for your file along with all related documentation, so you can rest assured that you have met your legal obligations.
We offer the following as part of our service:
To start the Section 5A or 5B Notice procedure to offer leaseholders the Right of First Refusal, or to learn more about our service, complete the contact form and one of our advisors will be in touch to discuss how we can assist you. When you sell your freehold ground rents to us, we’ll always offer to serve the Section 5A Notices on your behalf for no additional cost.
Mr Cooke wanted to sell his freehold quickly in order to raise some much-needed capital. As such, he wanted to keep the costs involved with the sale to a minimum, which included the service of the Section 5 Right of First Refusal Notices. Mr Cooke assumed that the only assistance he could employ for these legal documents would be from solicitors. However, after carrying out research, he discovered that it would be too costly to appoint a solicitor to prepare and serve the notices on his behalf.
As a result, Mr Cooke decided to take matters into his own hands and prepare the Right of First Refusal Notices for a private sale by himself. Unfortunately, the Notices were later rejected by Mr Cooke’s savvy leaseholders because he had failed to include essential pieces of information, which rendered the Notices invalid. This therefore meant an unwelcome delay in the sale of Mr Cooke’s freehold.
While Mr Cooke did not want the additional outlay, he realised that he needed professional assistance to ensure that the Section 5 Notices were served correctly on the second attempt. Fortunately, Mr Cooke discovered Freehold Sale’s Right of First Refusal Notice service and contacted us immediately.
We advised Mr Cooke that we could prepare and re-issue the Section 5A Notices at no additional cost to him. Furthermore, we would be able to provide this service on the same day that he contacted us. However, Mr Cooke would have to provide his leaseholders with a further two months to accept the offer as is required by the Section 5A Notice procedure.
Mr Cooke’s leaseholders chose to decline their Right of First Refusal offer, which enabled Freehold Sale to proceed with the purchase of Mr Cooke’s freehold interest. Although the sale was delayed initially, our fast and efficient service ensured that the sale went through quickly for Mr Cooke.
Mrs Shah wanted to sell freehold ground rents to a 5 unit converted building for which her late husband was the freeholder. Her solicitor advised that if she wanted to sell to a private freehold buyer, Mrs Shah would first need to serve Section 5A Notices to offer the leaseholders the Right of First Refusal. And in order for this to proceed, Mrs Shah would be required to employ a surveyor in order to determine a sale price for the freehold.
Unfortunately, Mrs Shah’s freehold interest was valued extremely highly by the surveyor, and it was the surveyor’s price that was offered in the notice. This meant that following service of the Section 5A Notices, not only did the leaseholders not accept their Right of First Refusal offer but Mrs Shah couldn’t find any private freehold buyers to accept the sale offer either. As a result, Mrs Shah thought that she would be stuck with owning and managing the freehold ground rents.
When Mrs Shah contacted Freehold Sale, we explained that we would be unable to accept the offer to purchase the freehold ground rents, as the sale price was much too high. However, we advised that the Section 5A Notice could be withdrawn and new Section 5A or 5B Notices issued straight away. The Section 5B Notice would enable Mrs Shah to place the freehold into an auction, in which the sale price would be determined by the highest bid amount.
For a low-cost fee, our team wrote to Mrs Shah’s leaseholders to inform them that the Section 5A Notice had been withdrawn. We also prepared the Section 5B Notices on Mrs Shah’s behalf and served these to the leaseholders. On the run up to the date of the auction (four months after the Section 5B Notices had been served), as part of our Section 5B Right of First refusal service, we provided the auctioneers with all of the relevant information about the freehold that they required on Mrs Shah’s behalf.
If you’re a landlord looking to sell the freehold of a property with at least two flats, in most cases you are legally required to serve all qualifying tenants (leaseholders) a Section 5 Notice. Landlords can be exempt from serving this notice in some instances, such as when the property is your only principal residence and has been for more than 12 months.
The Section 5 Notice is a document that both informs leaseholders of your intention to sell the freehold and gives them the opportunity to buy that interest before it is offered on the open market. This is known as the Right of First Refusal (ROFR) and is provided by Part 1 of the Landlord and Tenant Act 1987. ROFR is only applicable if the freehold contains at least two flats, no more than 50% of the building is in non-residential use, and more than 50% of the flats are held by qualifying tenants (leaseholders).
There are five different forms of notice under Section 5. These are based on the various ways a freehold property can be sold. These consist of the Section 5A Notice (for a private sale), the Section 5B Notice (for a sale by public auction), the Section 5C Notice (for a grant of an option or right of pre-emption), the Section 5D Notice (for a sale not pursuant to a contract), and the Section 5E Notice (for a sale for a non-monetary consideration). The most common of these are the Section 5A and 5B Notices, which we can prepare and serve on behalf of freeholders.
The Right of First Refusal only needs to be offered when the freehold property and the leaseholders (tenants) qualify. The property must contain at least two flats, more than 50% of the flats must be owned by qualifying leaseholders and no more than 50% of the building must be in non-residential use. Whereas the leaseholder must have a lease term of at least 21 years, must not own three or more flats and must not have a short-hold or assured tenancy.
When serving Right of First Refusal Notices, the qualifying tenants (leaseholders) will have two months to consider the offer. The notice is deemed to be served two days after posting. Once two months and two days have passed since the Section 5 Notice was posted, you are able to dispose of the freehold on the same terms as offered in the notice.
It is a criminal offence to sell a freehold without first offering the Right of First Refusal to the qualifying tenants (leaseholders), as it is a breach of the obligations set by the Landlord and Tenant Act. Not providing the proper notice to tenants can result in criminal conviction and a fine of up to £5,000. You will also have to undo the sale transaction with the freehold buyer and bear all the costs for doing so.
Following the disposal of a freehold, the leaseholders have the right to demand information relating to the sale within a specified timeframe, to verify that Right of First Refusal obligations were complied with. If it was discovered that the offer notice was not posted correctly, contained incorrect details, or if the drafting did not meet the prescribed format, it may invalidate the notice which would be considered an illegal transfer. The leaseholders then have the option of forcing the new landlord to sell the freehold to them at that price, if the landlord did not comply with their obligation to offer Right of First Refusal.
To learn more about the Right of First Refusal, download our comprehensive Right of First Refusal Guide. It’s been prepared by experts at Freehold Sale and written in plain English, so it’s easy to understand
Calculating the value of a freehold property can be a difficult task, with so many influential factors to consider. In fact, it is not unusual for people to miscalculate or even undervalue a freehold’s interest because they have overlooked a crucial detail. To ensure that you’re getting the right price for your freehold, contact Freehold Sale for an expert appraisal. Our team specialise in valuing freehold properties and will help you to understand the strength of your investment.