Leaseholder’s Right of First Refusal: MSB Success at the Court of Appeal

Mark Forman and David Tarttelin of MSB’s Litigation Department successfully acted for the Appellant in a recent Court of Appeal decision, SGL 1 Limited v FSV Freeholders Limited [2026] EWCA Civ 267. This judgment has provided important clarity on what is meant as a “building” for the purposes of tenants’ rights of first refusal under the Landlord and Tenant Act 1987.

The case concerned a development in Liverpool which was sold to a developer by the Joint Administrators of the previous development company. As part of the process, the Joint Administrators served Section 5 Notices on the leaseholders of the development, with those such Notices severing the transaction between the relevant “buildings” within the development. The development consisted of four blocks and the Joint Administrators had severed the transaction on the basis that there were two “buildings”. This severance was challenged in the High Court and HHJ Hodge KC initially found that the severance was incorrect. HHJ Hodge KC had followed the long-standing authority in Long Acre Securities Ltd v Karet [2005] Ch. 61 (2004). However, MSB, instructing John de Waal KC and Gemma de Cordova of Gatehouse Chambers, sought to appeal the decision on the basis that Long Acre required review and that the Section 5 Notices as served were indeed done so correctly. This appeal was a success and has brought much needed clarity to both developers and leaseholders as to the right of first refusal under the Landlord and Tenant Act 1987.

The new approach focuses on whether structures form a “functionally integrated built envelope”, rather than the older, broader approach that considered shared areas or amenities.

How MSB Solicitors Can Help

MSB Solicitors acted for the Appellant in this case and have deep expertise in advising on rights of first refusal under the Landlord and Tenant Act 1987. We assist landlords, tenants, developers and insolvency practitioners with:

-       Preparing and serving valid section 5 notices

-       Advising tenants on acceptance and nomination processes

-       Managing disputes involving multi-block developments

-       Structuring disposals and developments to remain compliant with the Act

MSB provides clear, practical guidance grounded in real litigation experience, including at appellate level.

If you have any queries regarding a leaseholders’ right of first refusal then please get in touch with the Litigation Department at civilitigation@msbsolicitors.co.uk