Landlord and Tenant Act: A Seller's Guide to LTA 1985, 1987 and CLRA 2002

Leasehold sales are governed by a patchwork of statutes. When buyers’ solicitors refer loosely to “the Landlord and Tenant Act”, they usually mean one of three:

• The Landlord and Tenant Act 1985, which regulates service charges, repairing obligations, and Section 20 consultation for major works.
• The Landlord and Tenant Act 1987, which gives qualifying leaseholders a right of first refusal when the freehold of a qualifying building is sold.
• The Commonhold and Leasehold Reform Act 2002 (CLRA 2002), which governs the right to manage and refines the statutory lease extension framework originally set out in the Leasehold Reform, Housing and Urban Development Act 1993.

For a seller, knowing which parts of each statute apply to your transaction determines what you need to disclose, what the buyer’s solicitor can reasonably ask, and what documents you need to produce.

LTA 1985: service charges and Section 20 consultation

The LTA 1985 sets out the framework for how service charges are demanded, reviewed and challenged. Two sections matter most at sale:

Section 20: major works consultation

Section 20 requires freeholders to consult leaseholders before carrying out qualifying works or entering into qualifying long-term agreements. The thresholds are:

• Works costing more than £250 per leaseholder. Common examples include roof replacements, external decoration, structural repairs and lift refurbishment.
• Agreements lasting more than 12 months that cost more than £100 per leaseholder per year. For example, long-term maintenance contracts.

The consultation itself runs in three stages: Notice of Intention, Notification of Estimates, and Notice of Award. Each stage has a 30-day observation period for leaseholders. If the freeholder fails to consult properly, they can only recover £250 per leaseholder — the rest is statutorily barred.

For sellers, Section 20 matters because:

• If consultation is under way, the buyer will inherit liability for unresolved costs.
• If consultation has been completed and works are scheduled or partly done, the apportionment of costs between seller and buyer is a negotiation point.
• Failure to disclose an active Section 20 consultation is a material non-disclosure that can expose the seller to a misrepresentation claim after completion.

For the detailed process, see our guide to Section 20 notices when selling a flat and our specific coverage of Section 20 major works during a sale.

Sections 18 to 30: general service charge rules

These sections define what counts as a service charge, require charges to be reasonable, and give leaseholders the right to challenge charges at the First-tier Tribunal (Property Chamber). For a seller, the practical consequences are:

• Outstanding service charge demands must be settled or apportioned at completion.
• Any active service charge dispute must be disclosed to the buyer.
• The last three years of service charge accounts are part of the standard leasehold management pack and will be scrutinised by the buyer’s solicitor and lender.

LTA 1987: right of first refusal

Part I of the LTA 1987 gives qualifying leaseholders a right of first refusal (sometimes called Section 5 notices) when the freeholder of a qualifying building proposes to sell the freehold. The key point for most sellers is this: the right of first refusal applies to the sale of the freehold, not to the sale of an individual flat.

If you are selling your leasehold flat, you do not need to serve right of first refusal notices. The right only becomes relevant if:

• You hold a share of the freehold as part of a share-of-freehold arrangement, and the freehold company is being sold or wound up alongside your flat sale.
• The freeholder of your building is selling the freehold, in which case you and your fellow leaseholders may have a statutory right to buy it collectively.

Where the right applies, the freeholder must serve a Section 5 notice giving qualifying tenants a two-month opportunity to elect to buy the freehold on the same terms. Non-compliance is a criminal offence and gives the leaseholders a statutory right to buy from a third-party purchaser within 12 months.

CLRA 2002: right to manage and lease extension

Right to manage

The CLRA 2002 allows qualifying leaseholders to take over management of a block of flats from the freeholder without having to prove fault. They do this by incorporating a Right to Manage (RTM) company and serving a claim notice on the freeholder.

If an RTM company is in place at your block, the practical implications for your sale are:

• The RTM company handles the management pack, not the freeholder, so the lead time and fee schedule may differ.
• Section 20 consultations are run by the RTM company.
• A deed of covenant, if required, may be to both the RTM company and the freeholder.
• The buyer’s solicitor will request documents from the RTM company.

For how to handle the deed of covenant paperwork when an RTM company is involved, see our deed of covenant seller’s guide.

Statutory lease extension

The statutory lease extension process is primarily governed by the Leasehold Reform, Housing and Urban Development Act 1993, with amendments in the CLRA 2002. It gives qualifying leaseholders the right to extend their lease by 90 years and reduce ground rent to a peppercorn, on payment of a premium to the freeholder.

If your lease has been extended under this route:

• The new lease will be registered at HM Land Registry.
• The extension is treated by buyers and lenders as clean and compliant.
• The ground rent is a peppercorn (effectively zero), which simplifies the buyer’s lender’s underwriting.

If your lease has not been extended and has fewer than 80 years remaining, marriage value becomes payable on any future statutory extension. Lenders typically refuse to lend on leases with fewer than 70 to 80 years remaining, which limits your buyer pool. Our guide to selling a property with a short lease covers the sale implications and your options in detail.

Does the right of first refusal apply to my sale?

A quick decision tree for sellers:

The definition of a “qualifying building” under the LTA 1987 is specific: it must contain two or more flats held by qualifying tenants, and the flats must together constitute more than 50% of the building. Your solicitor will confirm application based on the building’s specifics.

Section 5 notices: what they are and when they matter

If the right of first refusal does apply to a transaction, the freeholder must serve a Section 5 notice on each qualifying tenant. The notice must:

• Set out the proposed terms of sale, including the price.
• Give qualifying tenants at least two months to accept.
• Be in the form prescribed by regulations under the LTA 1987.

If a majority of qualifying tenants (more than 50%) accept, they must nominate a purchaser (often a company they form for the purpose) and the sale proceeds on the original terms. If the required majority does not accept, the freeholder can sell to a third party on the same terms within 12 months.

Disclosure obligations during the sale

The TA6 Property Information Form and the TA7 Leasehold Information Form (or, for sales after the 6th edition rollout, the combined forms) ask the seller about:

• Whether Section 20 consultations have been served.
• Whether the freeholder has notified them of any proposed major works.
• Whether an RTM company is in place.
• Whether the lease has been extended or has been the subject of a variation.
• Whether Section 5 notices have been served (for freehold or share-of-freehold sales).

Answer these questions carefully. Failure to disclose known information about Section 20 consultations, major works or lease extensions is the leading source of post-completion claims against sellers. For the mechanics of answering enquiries efficiently, see our guide to answering buyer enquiries.

What sellers should do before listing

• Obtain the last three years of service charge accounts from your freeholder or managing agent.
• Ask whether any Section 20 consultations are active or anticipated, and keep copies of any notices you have received.
• Check your lease for the term remaining and the nature of the ground rent. If under 85 years, get a lease extension valuation before listing.
• Identify whether an RTM company or a residents’ management company is in place.
• If you hold a share of freehold, confirm with your solicitor whether Section 5 notice obligations could be triggered by the sale.

Looking ahead: the 2024 Act

The Leasehold and Freehold Reform Act 2024 extends the statutory lease extension term from 90 years to 990 years, abolishes marriage value, reduces administration fees, and changes the process for varying ground rents. Most of these provisions require secondary legislation before they take effect and are not in force at the date of this guide. Sellers preparing for a sale in 2026 should proceed on the basis of the existing legal framework and check commencement dates before assuming new rules apply.

Sources and further reading

• Legislation.gov.uk — Landlord and Tenant Act 1985, Landlord and Tenant Act 1987, Commonhold and Leasehold Reform Act 2002, Leasehold Reform Housing and Urban Development Act 1993, Leasehold and Freehold Reform Act 2024 (legislation.gov.uk)
• Leasehold Advisory Service (LEASE) — Free advice on all aspects of leasehold law (lease-advice.org)
• First-tier Tribunal (Property Chamber) — Service charge disputes and lease extension determinations (gov.uk/courts-tribunals/first-tier-tribunal-property-chamber)
• The Law Society — Leasehold conveyancing protocol and guidance (lawsociety.org.uk)
• Department for Levelling Up, Housing and Communities — Commencement orders for Leasehold and Freehold Reform Act 2024 (gov.uk)

Related guides

• Selling a Leasehold Flat: Complete Guide
• Section 20 Notice When Selling a Flat
• Section 20 Major Works During a Sale
• Deed of Covenant When Selling a Leasehold Flat
• Selling a Property With a Short Lease
• Defective Lease: What It Means and How to Fix It
• Leasehold Management Pack Cost Explained
• How to Chase Your Freeholder for a Management Pack

Frequently asked questions