What is the right of first refusal?

The right of first refusal arises out of Part 1 of the Landlord and Tenant Act 1987 (as amended by the Housing Act 1996). Where you are a landlord proposing to dispose of your freehold or leasehold interest in a residential block of flats, you must first offer any qualifying tenants the opportunity to purchase your interest before it is sold on the open market or at auction. It is important to note that the offer that you make to your qualifying tenants must be at least as good as any subsequent offer that you make on the open market or at auction.

What the right to first refusal is NOT

It is very important to be clear about the right of first refusal. The procedure is often misinterpreted by landlords and tenants alike. As a landlord, it is important to bear in mind that the right of first refusal is not:

• A means by which your qualifying tenants may force you to sell your interest in the property to them.
• Applicable to an individual in a single flat.
• A means of allowing your qualifying tenants to negotiate on the price. This is set by either yourself (if selling on the open market) or at auction.
• Applicable to tenants of local authorities, housing associations’ houses, nor, in some instances, where there is a resident landlord.

Further questions? View our FAQ's.

Do your tenants qualify for the right of first refusal?

Your tenants may qualify for the right of first refusal if:

• They have a long lease which is not in respect of:
  1. A business tenancy;
  2. An agricultural tenancy;
  3. A tenancy linked to employment;
  4. A house;
  5. A sub-tenant of any of the above;
• They are not a tenant of two or more flats in the building.

The building will qualify for the right of first refusal if:

• It contains at least two flats;
• More than 50% of those flats are let to qualifying tenants;
• Not more than 50% of the building is used for non-residential purposes.