UK: Rights Of First Refusal Under The Landlord And Tenant Act 1987

Last Updated: 11 May 2016
Article by Eloise Morgan

A foil to development?

Part 1 of the Landlord and Tenant Act 1987 applies to premises which consist of the whole of or part of a building. It provides that any landlord wishing to dispose of his interest in a building containing two or more flats must first offer the interest to 'qualifying tenants'. If the tenants do not exercise their right, the landlord has 12 months to proceed with the disposal, which must be at the same or a higher price than that offered previously to the tenants. If the tenants do exercise their right, the landlord must either transfer the interest to the tenants' nominee purchaser, or withdraw from the sale.

For the Act to apply to premises, the 'building' must (in broad terms) contain two or more flats held by 'qualifying tenants', and more than 50% of the flats must be held by qualifying tenants. However, the Act does not define the term 'building', which has led to much litigation. 'Qualifying tenants' are (again, in broad terms) tenants with long leases as opposed to tenants holding on short-term lets.

Whilst the provisions of the Act are somewhat thorny and often criticised by practitioners for their poor drafting, failure to comply with them, without reasonable excuse, will have the following consequences:

  1. The landlord will commit a criminal offence, for which it can currently be fined up to £5,000; and
  2. A third party purchaser may also be required, on an application to the Court by the tenants, to transfer the interest acquired from the landlord to the tenants on the same terms as those on which it was acquired.

'Relevant disposal'

The procedure set out in the Act must be followed when there is a relevant disposal, unless the 'disposal' is expressly excluded by the Act.

As well as sales, relevant disposals include:

  • The grant of an option
  • A disposal of part of the common parts
  • A disposal by a mortgagee exercising its power of sale or lease

Landlord in default

A recent case, Artist Court Collective Limited v Khan (2015), is a salutary example of the court exercising its discretion to order a purchaser to transfer an interest it had acquired to the tenants.

In that case, the landlord, Mr Khan, sold the freehold interest in a block of 8 residential flats and 3 commercial units for £225,000 to a company owned and controlled by him. The company opened one of the units as a fish and shop, which upset the tenants in the block. The tenants therefore explored their rights, and became aware of the transfer to the company. They served a 'purchase order' on the company requiring it to transfer the property to them. In response, the company transferred the freehold back to Mr Khan for no consideration. The tenants then served a second purchase order on Mr Khan. The court held that Mr Kahn was obliged by the Act to transfer absolute title to the property to the tenants for no consideration.

Demising 'airspace'

Dartmouth Court Blackheath Limited v Berisworth Limited, a 2008 case, is one which will be of interest where there are premises which could be developed 'upwards'.

In that case, the Court held that the tenants of a block of 72 flats were entitled to a lease of the roof and airspace above the block. The intention had been for a developer to acquire the roof and airspace and to build new flats on the roof. The Court held that the airspace, at least to the height of the chimneys, was 'appurtenant' to the building, and that even if that was wrong, the airspace was a 'common part' of the building, because it was used now and then to facilitate repairs to the building. Therefore, the tenants were entitled to first refusal in relation to the lease of the roof and airspace (subject to resolution of how far above the roof the airspace extended).

Exercising caution: disposal of an exclusively commercial part of premises

The Act has some unexpected outcomes: when an exclusively commercial part of premises, such as a shop in a mixed-use building containing two or more flats, is to be disposed of, a notice should be served giving tenants in the building a right to refuse the terms of the proposed transaction. In practice, conveyancers almost universally omit this step. Of course, even if notice is served, it would be rare for residential tenants to take up the offer in this scenario but, strictly, it must be done and it will lead to a very significant delay in the context of granting a shop lease. Bearing in mind that non-compliance with the Act's statutory duties can lead to draconian consequences, we recommend that you take advice if you are in any doubt as to whether notice should in fact be served.

Please click here for our briefing note on the Landlord and Tenant Act 1987.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Shepherd and Wedderburn LLP
BrookStreet des Roches
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Shepherd and Wedderburn LLP
BrookStreet des Roches
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions