Right of first refusal
Sales on the open market
The landlord must first serve you with an offer notice (called a Section 5A notice) stating their intention to sell on the open market.
What the offer notice must contain
The landlord’s offer notice must state the terms for the offer to sell their interest, including:
- details of the property and associated freehold or headlease
- the price, which can be set by the landlord, and is not negotiable (unless the landlord chooses to negotiate)
- what deposit is needed (this must be no more than 10%)
The offer notice must also include:
- the landlord’s offer to enter into a contract on the terms
- the initial period: the date by which the leaseholders must accept the offer (at least 2 months from the offer notice date)
- when the nominated person (the person or company who will buy the interest) must be identified – at least 2 months after the initial period
How the offer notice must be served
The landlord must let at least 90% of qualifying tenants know about their intention to sell by serving them an offer notice. Where there are fewer than 10 qualifying tenants, the landlord may serve it to all but one.
They must also serve a copy of the offer notice to any right to manage company that has been set up for the building.
The date that the last notice is served counts as the date for all notices served.
If the landlord or their agent does not serve notice of right of first refusal where it’s due, they are committing a criminal offence and can be fined an unlimited amount.
Your acceptance notice
To accept the landlord’s offer notice you must:
- get more than half of the qualifying flats (“the requisite majority”) to participate
- respond with an acceptance notice stating your intention to accept the terms and price
- respond by the deadline set out in the offer notice (at least 2 months)
- state the person (or company) you nominate to acquire their interest (nominated person), if known at this point
If you have not yet decided on the nominated person (or company), you have another 2 months after sending the acceptance letter to decide on one. You can extend this deadline if the landlord and required majority of qualifying tenants all agree.
The landlord is free to sell their interest on the open market if:
- you do not accept
- you send your acceptance notice after the deadline
- the number of participating flats drops to 50% or lower
However, they cannot sell it for less money or on different terms than those in the offer notice for 12 months from the date of that notice.
Withdrawing from the purchase
If one or more qualifying tenants drop out at any point and you no longer have more than half the qualifying flats, you must notify the landlord. This will be a “withdrawal notice,” and will cancel any previous acceptance.
If you accept the offer but then withdraw after the end of the first 4 weeks of the deadline period in the offer notice (or fail to complete), the nominated person and the participating tenants might have to pay the landlord's reasonable legal and other costs.
The contract
Once you’ve accepted and informed the landlord of the nominated person, the landlord has 1 month to send the nominated person a contract for the sale of their interest in the property.
Once the nominated person receives that contract, they have 2 months to sign and return the contract and pay the deposit.
When the landlord receives the signed contract, they have 7 days to exchange.
- Last updated:
- 17 December 2025
- Next review:
- 17 December 2027