Purchase of mixed use Freehold and Leasehold titles?
Hi, I’m in the process of purchasing a mixed-use commercial premises. It consists of a leasehold 3 bed maisonette. The Freehold title includes a barbershop below.
The vendors are a father (freeholder) and a son (leaseholder). Their solicitor is asking to split the transfer deed to divide the purchase price between the leasehold and freehold titles.
I believe I can’t buy both as a single entity but am also concerned that dividing the price may also impact the SDLT I need to pay. i.e. a commercial unit and a residential unit each calculated separately rather than a mixed-use commercial rate on the total price, which is considerably less.
Any advice gratefully received.
Alan
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Member Since November 2017 - Comments: 1
12:19 PM, 19th April 2022, About 4 years ago
Hi Alan
So you are correct in that the Freehold and the leasehold cannot be owned by the same entity.
You can personally own own the Freehold and move the leaseholds into another entity.
Regarding The SDLT question the whole initial purchase will be based on a commercial SDLT (as its s mixed use) then you can split the titles and refinance after you have purchased and as long as the group company structure is appropriately set up, you will not have to pay SDLT again.
There is a group on Facebook focusing on Title Splitting
https://www.facebook.com/groups/2050169985113902
Check it out
Thanks and good luck
Member Since December 2019 - Comments: 35
12:46 PM, 19th April 2022, About 4 years ago
Try this. Son surrenders lease to father. Consideration therefor a matter for them. You buy freehold unencumbered.
I had a problem with buyer’s solicitor once. I put my foot down and they caved in (eventually). If they don’t agree, ask them why.
Good luck
Member Since August 2013 - Comments: 124
11:09 PM, 24th April 2022, About 4 years ago
I own a house with a separate flat above it. Two separate land register entries. The flat owns the leashold of the house and the house owns the leasehold of the flat. No I do not understand either. Apparently, this is known as a Tyneside lease or a cross over lease where the leaseholder of each property is also the landlord of the other. Clear as mud to me. However, it occurs to me there may be some inheritance tax planning opportunity. Do not automatically go for saving of a few pounds in SDLT if you can save a larger amount in IHT.