Freehold to leasehold flat – should I abandon the sale?

You need to check exactly what is going on because I think you have misunderstood somewhere.

If you own the freehold, you can just grant a lease but that does not destroy or convert the freehold.

I also don’t see how each flat could have its own freehold… It is more likely that each flat owner owns a share of the freehold on the building as a whole.

There are several types of freehold flats, flying freehold, creeping freehold, virtual freehold, and commonhold.

Mortgage lenders are concerned with what their liability and risk is with a freehold flat as they in reality own the property not you. Not do they really understand the conception. Also because there are often inadequate or no obligations to maintain, repair and insure the building.

Have a read of these and what to do.

https://www.freehold-sale.co.uk/resources/freehold-101-everything-you-need-to-know-about-freehold-properties-infographic/

https://www.ker.co.uk/freehold-flats-what-is-the-problem-and-how-can-i-fix-it/

https://www.landlordvision.co.uk/blog/buyers-guide-freehold-flats/

From what you describe, it sounds more likely that the three flats are currently held on leasehold and the leaseholders are trying to acquire the freehold.

Usually developers convert a building into say 3 flats, then they sell them on a leasehold Charing a service fee. With smaller developments like this, the service charges don’t cover the costs of repairs and Maintenace that are required and the freeholders go missing leaving the leaseholders having to split the costs of maintaining communal areas etc..

If the building is on one freehold, applications would have to be made to split the titles for it to create separate freeholds.

I think this may cause issues and have costs involved, it certainly doesn’t sound straight forward but if you are getting a cheap price, it could be worth the headache that may come with it.