Can’t find someone to lend on a freehold flat?

Pic of freeholder key landlord leasehold property118

by Readers Question

9:19 AM, 5th June 2023, 3 years ago 26

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Hello, last September I purchased the second flat in a converted Victorian house for which I already owned the first flat and the freehold. For whatever reason, I was obliged to merge the leasehold on the second flat with the freehold in order to obtain a loan to buy it. The second flat was uninhabitable at the time of purchase. I have now renovated the flat and would like to get a normal BTL mortgage but I cannot find someone to lend on a freehold flat.

As I understand it, if I create a new lease and grant it to myself, this will involve paying SDLT as a minimum and possibly CGT as I have increased its value from £380k to £450k. I am happy to pay for advice on the matter but want to find someone who can actually give me advice on whether my understanding is correct and what the best way forward might be. Is there anyone out there on this lovely site who can give either paid or free advice, please?

Many thanks for any and all comments,

Jamie

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Tags: advice, buy to let mortgage, freehold, leasehold, Stamp duty

Comments

Jamie Finch

Member Since December 2013 - Comments: 42

9:27 AM, 6th June 2023, About 3 years ago

Reply to the comment left by Colin Massey at 05/06/2023 – 10:56
Ah, excellent, I’ll contact them ?

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Jamie Finch

Member Since December 2013 - Comments: 42

9:30 AM, 6th June 2023, About 3 years ago

Reply to the comment left by Jonathan Cocks at 05/06/2023 – 14:58
Thank you. I knew at the time that this would be a problem for me but given the timing, it was either take the loan and try to sort it out later or lose my deposit.

Thanks

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Jamie Finch

Member Since December 2013 - Comments: 42

9:35 AM, 6th June 2023, About 3 years ago

Reply to the comment left by Simon Rhodes – Mortgage Broker at 06/06/2023 – 00:12
Yes Simon and I also am looking for a BTL mortgage but that gives me an idea. Maybe if I went for a personal mortgage I might find a lender.

Might you be able to help explore that?
If you can, my email address is [email protected]

Thanks

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JeggNegg

Member Since January 2022 - Comments: 267

11:01 AM, 6th June 2023, About 3 years ago

Reply to the comment left by Tim Rogers at 05/06/2023 – 22:55
my understanding is if you did complete a T Split, and create leasehold flats, from your Freehold building,
if the freehold is owned in a Ltd Co name, you can own the leasehold in your name or another Ltd company, as they are different legal entities.

i am not a lawyer, this is what i understand. good luck

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Tim Rogers

Member Since November 2017 - Comments: 263

11:13 AM, 6th June 2023, About 3 years ago

Reply to the comment left by Jonathan Cocks at 06/06/2023 – 11:01That is basically what we did.
The freehold is owned by a Ltd company, the leases on the flats are owned by individuals. Those individuals who took part in the funding of the forced freehold purchase are now directors of the new freehold company. We have an extra layer of complication in that most of the flats are operating as rentals.
So we have Freehold company, property lease holders and then rental tenants. As they are each separate entities, legally, for mortgage purposes and insurance, there have been no issues in the 6 years since it was set up.

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Jamie Finch

Member Since December 2013 - Comments: 42

11:31 AM, 6th June 2023, About 3 years ago

Reply to the comment left by Tim Rogers at 06/06/2023 – 11:13
The problem is, as I understand it, that the value currently sits in the freehold. If I grant myself a lease, I will have to pay SDLT at least and possibly have to effectively buy it from myself.

Thanks

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Crossed_Swords

Member Since April 2021 - Comments: 189

11:35 AM, 6th June 2023, About 3 years ago

You don’t need to tell HM Revenue and Customs (HMRC) about some land and property transactions which are exempt from SDLT. They include:

transactions where no money or other type of payment changes hands

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JeggNegg

Member Since January 2022 - Comments: 267

12:10 PM, 6th June 2023, About 3 years ago

Reply to the comment left by Jamie Finch at 06/06/2023 – 11:31
Jamie as i understand there are something like 45 plus SDLT exemptions and reliefs available.
try looking at http://www.gov.uk
then Stamp Duty Land Tax

or find a specialist who can assist you.

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Jamie Finch

Member Since December 2013 - Comments: 42

12:12 PM, 6th June 2023, About 3 years ago

Reply to the comment left by Crossed_Swords at 06/06/2023 – 11:35
Ah ha! Thank you

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Jamie Finch

Member Since December 2013 - Comments: 42

12:13 PM, 6th June 2023, About 3 years ago

Reply to the comment left by Jonathan Cocks at 06/06/2023 – 12:10
Thank you and if you know of a specialist, please let me know! ?

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