What is a Section 21 Counter Notice from a Freeholder?
(Last Updated: 29/05/2024)
22/09/2019
8
5 min read
Key Takeaways
- Your freeholder can't refuse to sell you the freehold, if you are eligible
- If the freeholder fails to issue the section 21 notice, the freeholder may apply for a vesting order
- If both parties cannot agree on the terms and premium for the purchase, the Tribunal can determine them fairly
- There are time limits for each stage if you have to go through Tribunal
A section 21 counter notice is served by the freeholder on the leaseholder in response to the leaseholder's Section 13 Notice to buy the freehold. The section 21 notice has to be served at latest by the date stated in the leaseholder's notice and failing to do this could lead to the leaseholders applying to court to obtain a vesting order.
The Leasehold and Freehold Reform Act 2024 was passed on the 24th May 2024, but is not yet in effect and the date for this is not yet clear. We will update our content as and when the finalised legislation is published. Read more - Expected changes
The content contained within the notice is set out within the Leasehold Reform Act. The notice includes:
- 1
Confirmation whether:
- the landlord admits the participating tenants are entitled to purchase the freehold; or
- the landlord does not admit the participating tenants are entitled to purchase the freehold and to specify why not; or
- the landlord intends to redevelop the whole or a substantial part of the specified premises
- 2
If the participating tenants are entitled to purchase the freehold the counter notice must also confirm:
- what proposals are accepted, if any; or
- if the proposals are not accepted, such as the premium, in which case the counter notice must offer a counter proposal; or
- if (in a case where any property specified in the initial notice under section 13(3)(a)(ii) is property falling within section 1(3)(b)) any such counter-proposal relates to the grant of rights or the disposal of any freehold interest in pursuance of section 1(4), specify the nature of those rights and the property in respect of which it is proposed; and
- state which interests (if any) the nominee purchaser is to be required to acquire; and
- states which rights (if any) the landlord wishes to keep.
- 3
The full address in England and Wales where notices may be served against the landlord;
- 4
The date of the Section 21 Counter Notice; and
- 5
The signatures of the landlord or their intermediary.
What are the time constraints?
- The freeholder must serve their Section 21 Counter Notice on or before the date stated in the Section 13 Notice.
- If the counter notice rejects any of the terms of the initial notice, the leaseholders and freeholder have 2 months after the date stated in the counter notice to negotiate the terms and premium.
- After the first 2 months, the leaseholder has 4 months to make an application to the Tribunal to determine the terms/premium of the purchase of freehold.
- The leaseholder and freeholder have 4 months after the date they both agreed to the terms to complete the purchase of freehold. If there is a delay, neither party can make an application to court for the first 2 months after terms are agreed ('Appropriate Period'), however they should make an application for a court order in the 3rd month. You cannot make an application after 4 months.
The timelines are set our within the Act
What happens if the landlord fails to serve a counter notice?
Under the Trustees Act 1925: Part IV - Vesting Orders, in relation to the freeholder's obligation to send a counter notice, it states:
"...(vi)Where a trustee jointly or solely entitled to or possessed of any interest in land, or entitled to a contingent right therein, has been required, by or on behalf of a person entitled to require a conveyance of the land or interest or a release of the right, to convey the land or interest or to release the right, and has wilfully refused or neglected to convey the land or interest or release the right for twenty-eight days after the date of the requirement "
"...the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct"
Where the landlord fails to serve a counter notice th leaseholders can make an application to court for a vesting order.
Free initial leasehold advice
Arrange a free consultation with one of our experienced conveyancing executives on:
- Lease extension.
- Purchasing the leasehold, freehold or share of freehold.
- Selling a leasehold property with a short lease.
- Extending the lease at the same time as you sell.
We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension. Request a tailored quote for:
- RICS Lease Extension Valuation or L2 Homebuyers Survey.
- Serving of the section 42 notice or section 13 notice on the freeholder.
- Negotiation with the freeholder (with the support of your RICS valuer).
- Completion of the legal work, including deed of variation.
- Application to Tribunal to determine the premium.
- Vesting order for absent landlords.
Frequently Asked Question
20
Refuse
After
NONOTICE
Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
