Leasehold Solutions, the market leader in project managing lease extensions and freehold acquisitions, has launched Section 5 Solutions, a specialist division that provides expert advice to flat owners when they are served with a Section 5 Notice by their freeholder.
Louie Burns, Managing Director of Leasehold Solutions, said: “In the wake of the so-called ground rent scandal, we’ve seen that freeholders are very anxious about how the Government intends to reform the leasehold system, and many freeholders are disposing of their freehold interests via Section 5 Notices ahead of the introduction of new legislation.
“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.
“We have launched Section 5 Solutions in order to provide flat owners with expert advice on the best course of action when they have been served with a Section 5 Notice. We project manage the entire process on leaseholders’ behalf, quickly uniting all neighbours and coordinating the work of the numerous parties involved.”
What are Section 5 notices?
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 a majority (over 50%) 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).
Burns continued: “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.
“However, time is very much of the essence, as there are tight legal deadlines surrounding a Section 5 Notice; 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.
“Our experience shows that freeholders will use every trick in the book to delay the process, in order to thwart leaseholders’ chances of purchasing the freehold, so the they can sell to their preferred buyer. For example, freeholders often issue Section 5 Notices during the summer months or in the run-up to Christmas, when many people are on holiday and it can be very difficult for leaseholders to organise themselves in time.
“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).
“We have been working with owners of flats and leasehold houses for 16 years and passionately believe that every leaseholder, where possible, should purchase the freehold of their building and gain full autonomy over their own property and financial destiny.”
The new Section 5 Solutions website provides flat owners with a range of free advice, including information videos to help leaseholders learn more about Section 5 and the Right of First Refusal process.