What is Right of First Refusal? : A Landlord Guide

If you’re a landlord, you might have come across something called the Right of First Refusal. It sounds formal (and it is), but it’s also something that can catch you off guard if you’re not prepared.

So what is right of first refusal, how does it work and what does it mean for your plans to sell? In this straight-talking guide, we’ll walk you through everything you need to know, including how to move forward with confidence.

So, what is right of first refusal?

The Right of First Refusal (ROFR) is a legal requirement that affects landlords who want to sell a property containing flats. In short, it means you have to offer the property to your leaseholders (your tenants) first before selling it to anyone else.

The rule applies when you want to sell the freehold of a building that’s been divided into flats. If more than 50% of those flats are owned by qualifying tenants (usually leaseholders), then you’re required to give them the chance to buy it first, before it goes on the open market.

The rule comes under the Landlord and Tenant Act 1987 and is designed to give leaseholders more control over where they live. But it can cause headaches for landlords if they don’t know the rules.

When does right of first refusal apply?

The rules only kick in under certain conditions. Right of first refusal applies if:

• You’re selling the freehold of a building that’s been converted into flats
• More than 50% of the flats are owned by qualifying tenants (generally leaseholders with leases over 21 years)
• The building has at least two flats

It doesn’t apply if:

• You’re selling a single flat, not the freehold
• The property isn’t divided into flats
• The building has fewer than two flats, or not enough qualifying tenants

It’s also worth noting that if you’re gifting the property, transferring it between family members or the sale is part of a court order or mortgage repossession, right of first refusal likely won’t apply, so check the guidance to find out.

How does right of first refusal work?

If your property sale falls under the ROFR rules, you’ll need to follow a formal process:

1. Serve a Section 5 Notice

You must serve a Section 5 Notice to all qualifying tenants. This is a legal document that outlines the terms of the sale, including the proposed price, and gives them the right to purchase.

2. Wait for a response

The tenants usually have two months to decide if they want to accept the offer. If they do, they need to form a group and nominate someone (usually a company) to purchase on their behalf.

3. Proceed or withdraw

If the tenants say yes, you move forward with them. If they decline or don’t respond within the timeframe, you’re free to sell the property on the open market, but only on the same terms as you offered the tenants.

And yes, this can delay your plans to sell, especially if the tenants want to buy but struggle to organise themselves in time.

What happens if you don’t comply?

This is where things get serious. If you don’t follow the right of first refusal process properly, your tenants can take legal action. The courts can even force the buyer to transfer the property back to the tenants.

You could also face a fine or prosecution. So it’s not something to try and sneakily sidestep.

Can right of first refusal slow down a sale?

Yes, and that’s often the biggest headache for landlords.

Selling to tenants requires extra paperwork, more legal checks and a two-month window just to see if they’re interested. If they want to proceed, the sale can stretch on even longer while they secure funding and set up a company.

Even if they say no, you still have to wait out the full period and stick to the original offer terms when selling to someone else. So it’s easy to see why many landlords find the process a drag.

If speed is important to you, this can be a major stumbling block.

Can you avoid right of first refusal?

Not really. At least, not legally.

If your property qualifies under the rules, you have a legal duty to follow the process. That said, some landlords try to get around it with informal deals or non-standard sales – but this can backfire badly.

You can’t simply sell to a friend or company to skip the process. If the sale qualifies, tenants must be offered first refusal. The law is designed to protect them.

If you’re unsure whether it applies to your property or how to handle the process, it’s worth speaking to a solicitor or property expert. It’s also something our team at Sell House Fast can help you understand.

What if I want to sell quickly?

If you’re on a tight timeline, ROFR can feel like a massive barrier. Waiting months for a decision or dealing with a slow sale through leaseholders isn’t ideal if you need to release funds, pay off a mortgage or just move on.

That’s where a service like Sell House Fast comes in.

We can help you explore your options – even if you need to go through the right of first refusal process, we’ll guide you through it quickly and clearly.

And if ROFR doesn’t apply, we can complete in a matter of days. No waiting, no faff, no hidden fees.

Confidence comes from clarity

If you’re a landlord wondering what is right of first refusal and how it works, the good news is: now you know.

Yes, it can slow things down a bit. Yes, there are hoops to jump through. But with the right support and clear understanding of your obligations, it doesn’t need to derail your plans.

At Sell House Fast, we’re here to make the process easy. We offer:

• A simple, transparent process
• Personal, friendly support
• Quick cash sales (often in a matter of days)
• National coverage across the UK

We follow strict guidelines from The Property Ombudsman and treat every seller with honesty and respect. If you’re thinking of selling and want to avoid long waits or legal tangles, get your free, no-obligation offer today.

There’s no pressure, just a chance to see what’s possible. All you need to do is enter your postcode.