How Our Solicitors Can Help with Section 5A Notices
Our team of expert landlord and tenant solicitors can help navigate the process of sending and responding to section 5A notices, as well as help manage the process of buying and selling a share of freehold.
Advising landlords on legal compliance: Our solicitors can help landlords draft and serve a valid section 5A notice, ensuring compliance with the legal requirements and avoiding potential disputes
Supporting tenants with the purchase process: Our experts can represent tenants in negotiations, help them organise the collective purchase, and ensure they meet all legal deadlines to buy a freehold property.
Dispute resolution: Our solicitors can assist in resolving disputes between landlords and tenants, whether through negotiation, mediation, or legal action if necessary.
Why Choose Lawhive for Section 5A Notice Advice?
We're not like your average law firm. Getting advice from a Lawhive solicitor guarantees all of the below:
Expertise in Leasehold Property Law: Every solicitor we recommend has experience in handling section 5A notices, helping both landlords and tenants understand and comply with their legal obligations
Tailored Legal Support: Provide personalised legal advice based on your specific needs, ensuring the right of first refusal is handled smoothly and efficiently
Cost-Effective and Efficient Services: We use technology to streamline the legal process, offering you affordable and fast legal services for handling section 5A notices
Who Qualifies for Section 5A Notices?
A section 5A is a formal notice served by a landlord to qualifying tenants (leaseholders) informing them of their intent to sell the freehold. It gives leaseholders the right to purchase the property freehold before it is listed on the open market and sold to a third party. This gives leaseholders the opportunity to take control of their building.
Tenants must meet certain eligibility conditions to qualify to purchase their leasehold under section 5A. The main eligibility criteria are:
Qualifying tenants must have had a minimum of 21 years on their lease when it was originally granted
At least two-thirds of tenants must be qualified
Over 50% of the qualifying tenants must agree to purchase the freehold, known as collective enfranchisement
What Are Tenants’ Rights to First Refusal?
Section 5A of the Landlord and Tenant Act 1987 gives qualifying tenants the right of first refusal. Freehold building owners are generally required to offer the freehold interest jointly to flat owners before selling to a third party.
Can the Right of First Refusal Be Waived?
Yes, rights of first refusal can be waived by landlords, but there are only very few exemptions. These include:
When the property only contains one flat
When the property is converted into houses
The disposal to an associated company – when the freehold is transferred to another company which has been associated with the transferring company for at least two years
A sale by two or more people of the same family to a combination of the same family
Landlord Obligations for Section 5A Notices
Landlords have a legal requirement to offer leaseholders the right of first refusal when looking to sell a freehold. They also must follow the correct legal procedure when serving a section 5A notice, including providing the correct information about the sale, such as the terms and the asking value.
The notice must be served in accordance with the terms of the tenancy agreement or it could be considered invalid and thrown out by a judge. Landlords may face legal consequences if they fail to serve a valid section 5A notice or attempt to sell the property without offering it to the tenants first, including fines or having the sale declared invalid.
Failure to comply with the statutory requirements of section 5A can be a criminal offence.
What Information Should a Section 5A Notice Include?
Section 5A notices, under the Landlord and Tenant Act 1987, should include the following:
Address: The full address of the freehold up for sale
Freeholder Contact Details: The contract details for the freeholder
Property: Details of the property being sold
Terms: The terms of the sale
Notice: The timeframes that leaseholders have to respond in and appoint a purchase
Tenants Guide: How to Respond to a Section 5A Notice
Tenants typically only have a two-month window to respond to a notice so they must be organised in order to decide whether they will buy the freehold before the notice expires.
Organise a Tenant Group
A tenant group, known as a tenant association, is a group formed by leaseholders who live in the same building or development. They are used to represent the group’s interests to negotiate with freeholders over aspects of purchasing the freehold of a property. The alternative to creating a tenant group is to appoint a solicitor to represent the group.
Accept or Make a Counteroffer
After receiving a 5A notice, which includes the landlord’s valuation and terms, tenants can either accept the terms set out by the landlord or make a counteroffer, negotiating more favourable terms before committing to the purchase. Working with an experienced solicitor and surveyor can help tenants negotiate more favourable terms.
What Happens Once Leaseholders Accept?
When leaseholders decide to accept their freeholder's offer, the qualified flat owners need to formally write to accept the offer and begin the contract process. The nominee purchaser is sent the contract to sign within one month of the freeholder being notified of their nomination.
Contracts are exchanged within seven days. The nominee purchaser then has two months to return the contract when they receive it and pay the deposit, usually 10% of the purchase price. After contracts are exchanged, the sale will be completed on the date specified in the contract.