When selling the freehold (or long leasehold) interest in a property subject to short residential tenancies, the T’s right of pre-emption under LTA 1987 must be considered. In particular, notices may have to be served on ‘qualifying Ts’.

Ts under assured tenancies are not ‘qualifying Ts’ for the purposes of the 1987 Act. A problem has arisen in recent years, where a property contained short residential tenancies with a rent in excess of £25,000 pa. Such tenancies are ‘common law tenancies’ and so are ‘qualifying tenancies’ under the 1987 Act. This has led to the surprising result that Ts of short residential tenancies must, in certain circumstances, be served with s5 notices under LTA 1987 (and offered the opportunity to purchase the freehold!).

It is worth noting that, from October, such tenancies will not be common law tenancies (unless the rent exceeds £100,000 pa), and accordingly will no longer be ‘qualifying Ts’ under the 1987 Act. The present inconvenience of having to serve them with notices will not longer apply. Source: Wedlake Bell (writing in www.practicallaw.com (subscription service)).