A new website has been set up specifically to help leasehold flat owners who have been served a Section 5 Notice by their freeholders.
Under the Landlord and Tenant Act 1987, a freeholder who wishes to sell the freehold interest in a block of flats must first serve a Section 5 Notice on the flat owners, giving them the opportunity to buy the freehold to their flat, known as the Right of First Refusal.
If over 50 per cent of the leaseholders wish to acquire the freehold on those terms, then they must notify the freeholder within the time limits set out in the Notice - typically two months.
Now Leasehold Solutions, which has been campaigning for comprehensive leasehold reform in recent years, has launched Section 5 Solutions to help flat owners in this circumstance.
"During the past decade, we have successfully completed more than 150 Section 5s on flats ranging from small blocks to large multi-million-pound projects. We have successfully bought Section 5s from the Wellcome Trust, the Crown Estate and many of the biggest freeholders in the UK” explains Louie Burns, managing director of Leasehold Solutions.
"When leaseholders receive a Section 5 Notice from their freeholder, it presents a fantastic opportunity to purchase the freehold of their building and gain full autonomy over their property and financial destiny” he says.
"However, time is very much of the essence, as there are tight legal deadlines; the clock starts ticking from the moment the freeholder issues the Notice, not from the time the leaseholder receives it through the post. Leaseholders that fail to respond within the timeframe – even if they are one day late – will lose their legal right to buy the freehold and the freeholder will then be free to sell it to whomever they wish” Burns adds.
He says freeholders often serve such notices at awkward times in order to thwart leaseholders' chances of purchasing the freehold, thus allowing the sale to be made to a preferred buyer instead. Burns claims Section 5 Notices are often issued during the summer months or in the run-up to Christmas.
"The issue is even more complicated, as the Section 5 requires more than 50 per cent of the block's leaseholders to agree to purchase the freehold at the same time, so experienced project management support can be invaluable to arrange financing for non-participants.
"There are numerous benefits to owning the freehold, such as getting rid of ground rent and fees for licences or permissions to make home improvements, reduced service charges, and that there will be no future fees to extend the lease (except minimal legal costs).”