Does Multi occupancy/HMO affect property value?Make Text Bigger
There are two flats in a converted terraced property of which I own the ground floor flat. The other first floor flat (FFF) is owned by another leaseholder. I bought the freehold over 10 years ago with the previous leaseholder who then sold up and it was transferred to the current leaseholder and hence we both now own the freehold jointly.
We both signed a deed of variation in November 2015 whereby we agreed to let each other have permission for a rear extension and internal alterations on my flat for more than one occupancy and him a loft conversion.
Also changed the wording on the lease so to be able to rent for more than one occupant (as lease stated one occupant) and also I allowed owner of FF flat to have consent for a loft conversion and wooden flooring in agreement. This deed of variation was not registered at the Land Registry at the time.
Recently, the FFF leaseholder wants to sell his flat and has asked me to sign a deed of variation that is different from the original deed of variation. It states “The lease does not include the loft space of the building and the tenant has requested the landlord to vary the terms of the lease and to replace and substitute the plan to the existing lease with the plans annexed to the deed which the parties have agreed to so in the terms and in the manner hereinafter appearing” The hereinafter is the tenant wishing to carry out works to convert the loft space of the building into additional living accommodation and the annexed plans include the loft space delineated in red to indicate first floor leaseholder will own loft space.
He is now threatening me with litigation if I do not sign this new deed of variation, even though I have mentioned that the current deed of variation has changed substantially as it is now asking me to sign over roof space to the FFF leaseholder which he never owned but has been jointly owned by the freeholders. I asked that we should negotiate and for him to purchase my share of the roof space so that he owns it outright. Instead of agreeing to this, he is now threatening to take legal action as he claims that the value of his property has fallen due to my using my flat as a multi-occupancy (I have three tenants).
From my landlord experience, I don’t think that the property value is significantly affected, as the location is highly desirable and sought after and I think this determines the value rather than being a rental with more than one occupancy or even calling it an HMO which it will now have to be as there is selective licensing for landlords who house 3 or more tenants.
My two questions are:
1) if I am being unreasonable with asking for a premium for the loft space he doesn’t own?
2) if a property is indeed used as a multiple occupancy or an HMO does it substantially reduce the value of the property or its saleability in an already flat dominated highly sought residential area?
Thank you in advance.
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