Yes you would need the entire freehold to take the demise of the loft and freehold over the downstairs flat. The tenant's rights are likely to be guaranteed so that they can't be ousted or compromised by your obtaining the freehold. If it's just the flat itself you'd be happy with then you can deal with Southwark as you wish - their service charges on Victorian conversions are usually relatively cheap, but prepare for lengthy back and forth with them over their amazingly uncompetitive costs for planned works. (Maybe somebody's enjoying themselves at leaseholders' expense.) You might be able to buy the leasehold flat and then buy the loft demise from Southwark though this will take time, legal fees, surveyors etc. The loft won't be included in the sale of the flat as is. (If the estate agent involved has half a brain and has proper paperwork from the vendor in place they should already know all this.) Also remember that the current occupant on the ground floor might be lovely and quiet, but the tenancy might subsequently pass to someone else not so sociable.