Ambiguity in lease – who does it fall to?
3 years ago | 14 comments
Can’t find someone to lend on a freehold flat?
9:19 AM, 5th June 2023, 3 years ago
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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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3 years ago | 18 comments
How to create a separate leasehold?
3 years ago | 6 comments
Member Since January 2022 - Comments: 267
12:18 PM, 6th June 2023, About 3 years ago
Reply to the comment left by Jamie Finch at 06/06/2023 – 12:13
you have my phone number . please call me if you have time.
Member Since April 2021 - Comments: 189
12:18 PM, 6th June 2023, About 3 years ago
You’ll need a solicitor to split the title, they should be able to advise you but there is no SDLT to pay if no money involved. That means you must do it before remortgaging as that would trigger a liability if you try to do it at the same time.
Member Since December 2013 - Comments: 42
1:04 PM, 6th June 2023, About 3 years ago
Reply to the comment left by Crossed_Swords at 06/06/2023 – 12:18
That’s great thanks and a big relief as a way out of this.
I will explore this but it seems like it should work well ?
Member Since July 2016 - Comments: 13
8:56 PM, 6th June 2023, About 3 years ago
I had freehold mortgages on flats from both natwest and skipton, skipton is a legacy from taking over Scarborough BS as there are a lot of freehold flats in scarborough
Member Since November 2022 - Comments: 37
3:25 PM, 7th June 2023, About 3 years ago
Reply to the comment left by Simon Rhodes – Mortgage Broker at 06/06/2023 – 00:09
Good afternoon Simon
I am looking for a Limited Company BTL mortgage. If this is something you can assist with please contact me [email protected]
Member Since March 2016 - Comments: 85
8:17 AM, 10th June 2023, About 3 years ago
Can you clarify what your current ownership structure is?
From reading the post it appears as if you own a lease on one flat, and the other flat is now incorporated in the freehold of the building.
Is that correct and are both held in your own name? You said that your previously owned the freehold and the other flat – was that both in your name too as I always understood that the freeholder and leaseholder couldn’t be the same entity?
I’m not a lawyer or accountant but I believe your potential issue is the ‘consideration’ when it comes to SDLT. Even though there is no payment, the loan amount counts as the ‘consideration’.
If you have a spouse, you could transfer the freehold to them, they grant you back a 999 year lease on the flat which you mortgage (it needs to be with a lender that is happy to lend on new leases less that 6 months old which many are not) and repay the old loan. All done on the same day with no SDLT (as freehold value is minimal) or CGT (as spouse). It does require a solicitor that has done this before and lenders who understand the process. And if anything is currently owned by a Ltd Co I’m not sure if it would work.
If you can borrow as a freehold flat then that would be easier! Although again some lenders may lend on a freehold flat but take issue with you effectively owning the entire building as it will breach their exposure conditions on the total % of a building they allow you to own.