I'm still not sure about this. I can't see why the guy upstairs wants to do it, he said its a good time as the valuation will be low atm due to covid and he also doesn't want to "remember to pay the ground rent/extend the lease" (his lease is 125 years). Does he want to do it so its easier to extend his flat or something? Or is it just to add value for sale?
Tbh, I don't really trust the guy (he has builders in building a huge "shed" built during lockdown in his garden, one for the bastard neighbours thread) so I feel there could be hassle in the future if we're both freeholders. If I extend my lease through the formal route, my ground rent will be peppercorn rent (zero) so having thought about it I actually don't see that much advantage to being a freeholder?
I'll try to explain it a bit. There are three options here really.
The first is that you pass on it, and he can't afford to buy on his own. Fine. But if that freehold is up for sale, there's a decent chance that whoever owns it will just put it up for sale on the open market or at auction. And no-one who buys freeholds at auction has your best interests at heart. They will employ a managing agent, they will charge you for ground rent collection, they will enforce the covenants for the building, and you will pay a service charge over which you have no control unless you're prepared to learn a lot about the tribunal system. If you don't think this happens, google some of the companies which do it - Eagerstates, Assethold, Triplerose - and see what hapens to their house prices. That's your worst case.
The second best case is letting him buy on his own. In this situation, he becomes your freeholder - effectively your landlord, in law. If you want to make any alterations to the building, you need to ask his permission. If he elects to carry out major works, and your lease allows it, you need to pay him for them. If you don't, he can enact forfieture proceedings against you - you can be kicked out of your own flat. You also need to pay him for the privilege of extending your lease. And there's no standard formula for that. His lawyers will be able to demand more or less what they want, within certain limits. I had a short lease (65 years) which I extended last year; the total cost came to £31k including lawyers fees. I don't imagine he'll be able to charge you as much as that - I had to deal with marriage value which adds quite a bit on - but you're still talking significant money. And he'll certainly want to make at least some of the money he spent buying the freehold back from you or your subsequent tenants.
Now think about what happens if you go in with him. If you buy the freehold with him, you can both extend your lease for nothing - just the legal paperwork. He has the ability to do this too - you both win - because you're both co-owners. You both get equal votes in work to be done to the flat. You become co-inforcers of the lease (meaning that you can challenge the shed with the legal powers of the courts behind you!). You'll also add probably about 10% to the value of both flats, because those of us with aggressive or absent freeholders know how much of a nightmare that is. Look at 'share of freehold' flats on Zoopla and note how much nicer and more expensive they are. That's no coincidence.
If you don't trust this guy that's fine. You can insist on using your own lawyers - I'd recommend Mari Knowles or Amanda Gourlay, both excellent on these matters. But a freeholder is a position of strength. A leaseholder is a position of weakness.