Have we lost our right to buy the freehold?

He's bluffing. I can't imagine anyone would pay £32k for the freehold of 4 flats, especially with the looming leasehold reforms. Has he issued you a formal notice or is this an informal sale? Take control. Get it onto a formal basis and threaten to start the formal Right to Enfranchise process immediately, using a specialist solicitor. The freeholder will have to negotiate the price, and if you can't agree, it will go to the FTT. During that process he can't sell to a 3rd party. The process could take up to a year, which I doubt he will want.

The value of the Freehold to you or the 3rd party is the future value of the ground rents and the cut of the service charge that the Freeholder might be charging for managing the building. Plus any ad-hoc charges in the Lease for permission to add a wall or add a new tenant or whatever is there.

For you, about to sell, it's a bit of a different calculation, but for the moment, lets say you weren't.

By enforcing the right to manage you take away the cut of the service charge income stream which I believe is up to 10% for managing. Plus any creative invoicing for bad work that might be happening. If the Freeholder is playing games I'd be inclined to go for this regardless.

As an alternative to purchasing the Freehold, when you extend a Leasehold, the ground rent is normally done away with. You currently have a statutory right to 90 years which will be extended to 990 years at some point.

If the cost to extend the Lease is significantly cheaper than buying the Freehold it might be the better thing to do given it will erase the ground rent.

If its cheaper to extend the Lease and you get the right to manage then the Freehold would become almost worthless as the Freeholder couldn't charge for much. Then you could make a low offer for the Freehold since nobody else will want it.

Going back to 'about to sell', doing the calculations above you could start the Lease extension process so that the prospective buyer has the information to hand an an easy choice.

More information on Lease extension here.

https://www.lease-advice.org/faq/i-am-a-leaseholder-how-do-i-calculate-the-premium-payable-to-extend-my-lease/

As you have alluded to, the trouble with self enfranchisement is who is then going to do all the work? There is the popular narrative that all freeholders, developers and managing agents are bad, but people overlook the fact that when faced with doing all the donkey work managing the estate by themselves, leaseholders either cannot or don't want to do it all themselves. They are not willing to spend time getting insurance, paying bills, arranging and supervising maintenance works and ensuring compliance with all the necessary laws and regulations. Leaseholders by and large only want responsibility for their own flat and this perhaps explains why freehold and leasehold has remained separated for so long.

Reply to the comment left by Robin Wilson at 26/02/2025 - 14:30
Thank you for all your replies. My thought was also why would anybody want to pay so much for Freehold? Our Ground Rent is £300 a year each which will double in 10 years or so but with a £1200 a year income it will take them years to recoup the Freehold cost. Our Leases are around 100 years each, so again, it would be 15 years before leaseholders will think about extending. Also as people have said, the law is likely to change in leaseholders favour in the meantime.
If we make it clear that we will exercise our right to manage they won't be able to charge us service charges and the Ground Rent would be their only annual income. It's absolutely not worth their while so they are probably bluffing.

Assuming each flat is worth £325,000 and there are 100 years left with £300 ground rent.

If all flats extend today the new freeholder will recoup £32,000.

If all flats extend in 15 years time the new freeholder will recoup £44,000. Assuming ground rent increases to £600 then £64,000 is recouped.

Even there will be leasehold changes you will still pay this. Only when you get to 80 years you won’t pay the marriage value that’s where the benefit to the leaseholder will be.

Cash rich investors will tuck this ground rent away and think of the long term.

Reply to the comment left by Robin Wilson at 26/02/2025 - 14:30That's a poor argument when so many blocks operate successful RTM Companies.
We manage 137 flats. We have 4 directors and have appointed our own professional managing agent. We hold regular meetings and keep a close eye on budgets. When block insurance managed by freeholders was increasing exponentially, our block insurance increased by only 4% in 2024, and actually dropped for 2025.
In this situation, there is very little work managing 4 flats. The insurance will be arranged by a broker.
The vast majority of leaseholders want to be real 'owners'. They are ready to accept the same responsibilities as freehold owners, and in doing so, reduce their service charges and stress levels.

The reason leasehold has remained for so long, and bear in mind it was ended in Scotland, is because successive governments have bent to the will of the wealthy and influential freehold lobby.

Reply to the comment left by NewYorkie at 27/02/2025 - 09:31
That is not my experience at all. The leaseholders I deal with do not want the responsibility and aggravation of managing the estate. They find that it is less stressful having a responsible landlord and responsive managing agent. They know that if the estate was handed over to them in the form of a management company on a one member one vote basis, they would all be bickering amongst themselves, pursuing their own narrow interests and so no decisions would be taken in the interests of the block as a whole.
They would want to run the block on the cheap which would then lead to deterioration and they would then be the first to complain about it.
Where exactly are you saving costs if you still employ a professional managing agent?