Selling freehold of small block of flats?

I appreciate you want to sell but just in case any other reader is considering selling the freehold. If the owner of the freehold is a limited company you don’t have to offer it to the leaseholders as tou just trade the shares in the limited company – The company itself doesn’t sell the freehold. That’s why most developments have been set up with individual companies.

I would be very careful to check the articles of association (assuming it is a company) and also the sub leases to be sure you can do the share transfer without rights of first refusal.

It’s been a while since I read section 5 but I think it talks about disposal and transfers between associated companies

Valuing a freehold is an art not a science and it isn’t very attractive invest in them at present since the government are planning capping ground rents at £250 so they will become worthless over time
You might find you get the best offer from the leaseholders

I’m also interested in responses as I may be in a similar position in a few years. However, I live in and still own one of the three flats. If the others aren’t interested I would need to convert mine to a share of freehold first so it would be sold with that which would be an advantage to the buyer. Then I’d need to sell the freehold for the other two on the open market.
Can I ask, Gabriela, is there a ground rent and how long are the leases? Mine pay peppercorn ground rent and the leases are long. I’m not sure in that case what value it would have to an external freeholder.

Reply to the comment left by Helen at 15/04/2026 – 11:19
@Helen…
If it’s a peppercorn rent and a long lease, what exactly do you think you are selling. As an investor, you only have potential liability for the owner of the freehold
They aren’t getting and income from ground rent and there is no prospect of capital growth (long lease).
I can’t see anyone wanting to buy that

Reply to the comment left by Tim Peters at 15/04/2026 – 11:25
The only advantage of the other leaseholders buying it is that if it is bought out by a Freeholder who then takes on a management company they could then be liable for high service charges as there is a sizable communal area. So this could be the advantage to an external freeholder buying it – not for the ground rent but for the potential service charges.

Reply to the comment left by Tim Peters at 15/04/2026 – 11:25

Just checked HMRC website regarding sale of freehold reversion held in a limited company and this is complex and legal advice should be sought.

The limited company is a separate entity from the leaseholders who are (1) shareholders bound by company articles and as (2) lessees bound by their leases.

A section 5 RFR under landlord & tenant act must be served on all leaseholders not just those holding subscriber shares.

Just to clarify regarding my original question, the freehold is not held by a company, it’s held by an individual. Also, I am aware that ground rent may be capped at £250 but that doesn’t mean it’s then worthless, it just affects the PV calculations, which I’m aware of.
I’m more interested in knowing what companies are still buying, even if they use lower valuations taking the potential government intervention into account.

Reply to the comment left by Helen at 15/04/2026 – 11:49
This is not as widespread as people think. Yes service charges have increased in recent years but what the government don’t say is that much of it is due to their policies

I managed buildings for 4 units to 300 units and the main cost pressures are
Insurance…since Grenfell, the market has collapsed and rates massively increased
Electricity….there is no price cap for residential buildings
Wages and national insurance…..we have very few employees but the lifts water pumps etc are serviced by contractors who do have to pay higher NI and they pass that on in higher costs.
Minimum wage has increased by over 45% in the last 5 years….Google it…..it’s unbelievable. Cleaners, gardeners etc are much higher paid now and that’s great, but someone (leaseholders) have to pay for it.

Managing agents are legally required to account for every penny they spend in service charge. If you think they are overcharging you can go to the first tier property tribunal and for £100 a judge and an expert with local knowledge will rule on it.

The “risk'” for the freeholder is if/when the government decides something needs upgrading….like all buildings need solar or sprinklers…..that might fall to the freeholder, just as the cladding repairs do in certain circumstances

Reply to the comment left by Kizzie at 15/04/2026 – 11:56
I completely agree, it can work in limited circumstances although I have always served s5 notices to be sure it can’t be challenged……..it wasn’t me suggested OP could avoid right of first refund transfering the shares

No, unfortunately it would be worthless
Using bank of England rates, £250 today will buy the same as £4.67 100 years ago.
We can’t predict future inflation, but using historical rates, in 100 years the ground rent won’t be worth collecting.
Many freeholds are held by pension providers…..wait and see what happens to the value of pensions if the government do manage to introduce the £250 cap

Also you say that the rent is already a peppercorn and the leases are long, so if I buy your freehold….. What is in it for me