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Right of First Refusal (Section 5 Notice)

Landlord A to Z ยท Regulation

โœ“ Written for landlords in Englandโœ“ Checked October 2026โœ“ Official sources namedโœ“ Not tax, legal or financial advice

Do I have to offer my block of flats to the tenants before selling?

Under the Landlord and Tenant Act 1987, a landlord selling a building with two or more flats may have to offer it first to the qualifying tenants by serving Section 5 notices. Long leaseholders usually qualify, but assured and assured shorthold tenants do not, so a block let entirely on ordinary tenancies is usually outside the rules.

Read more in our guide: Selling a property portfolio

Section 5 at a glance

PointPosition
Buildings covered2 or more flats held by qualifying tenants, over 50% of flats
Qualifying tenantsMainly long leaseholders; not assured or assured shorthold tenants
Offer periodAt least 2 months for tenants to accept
AcceptanceNeeds more than half of the qualifying flats
Failure to serveCriminal offence; tenants can force a sale to them later
Common exclusionsResident landlords, mainly commercial buildings

When the rules apply

The right applies when the landlord makes a relevant disposal, such as selling the freehold, of a building containing at least two flats where more than half are held by qualifying tenants. Qualifying tenants are mostly long leaseholders. Tenants on assured tenancies, business tenants and service tenants whose tenancy ends with their job do not count.

What it means for portfolio landlords

A landlord who owns a whole block and lets every flat on ordinary tenancies usually has no qualifying tenants, so no notices are needed. The rules matter where some flats have been sold off on long leases, or where you own a freehold with leaseholders and let a few flats yourself. Count the flats carefully before you agree a sale.

How the process works

  1. Serve a Section 5 notice on every qualifying tenant, setting out the price and main terms.
  2. Tenants have at least two months to accept, then time to nominate a buyer.
  3. If enough accept, you must sell to their nominee on the same terms.
  4. If not, you may sell to others for 12 months, but not for less or on better terms.

The cost of getting it wrong

Failing to serve notices without reasonable excuse is a criminal offence. The tenants can also serve notices on the new owner requiring information and, in time, force a sale to them on the original terms. Buyers' solicitors check this, so missing notices can stall due diligence.

Official Sources and Further Reading

General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.

Frequently Asked Questions

Under the Landlord and Tenant Act 1987, a landlord selling a building with two or more flats may have to offer it first to the qualifying tenants by serving Section 5 notices. Long leaseholders usually qualify, but assured and assured shorthold tenants do not, so a block let entirely on ordinary tenancies is usually outside the rules.

A sale of shares in the company that owns the building is generally not a relevant disposal, but the rules are technical, so take legal advice.

No. Assured and assured shorthold tenants are excluded from being qualifying tenants.

No. It only applies to buildings containing flats.

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