How do I transfer the freehold of a property that includes a leasehold flat?

How do I transfer the freehold of a property that includes a leasehold flat?

0:00 AM, 10th May 2024, About a month ago 8

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Hi, I wonder if anyone can help?

I own a leasehold flat above a small retail shop. I have a mortgage on my leasehold flat. My dad owns the freehold of the property which includes my flat and the retail shop which the rent provides an income to him.

He wants to transfer the freehold of the property including my flat and the shop below me.

From reading the forums I understand this is only possible if I make a ltd company as I cannot be the leaseholder of my flat and the freeholder of the property (including my flat) at the same time.

Am I correct in this?

Also, I see that most leaseholders who buy a freehold of their property put a nominal value on the freehold being transferred to the ltd company they set up. However, since the shop generates an income does this change anything?

Does this mean there is extra tax to pay or more hoops to jump through?

Any thoughts or ideas are much appreciated.


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9:56 AM, 10th May 2024, About a month ago

So there would be two leases granted out of freehold one your father and the other yourself.
So if you set up a limited liability company registered at companies house the two leases would each hold one share in FH interest held in man co.and you both have obligations to company memorandum & articles and companies act and HMRC and separately to the terms of your leases to preserve your mortgage grant. You’ll need a qualified in leasehold accountant

Graham Bowcock

12:54 PM, 10th May 2024, About a month ago

As ever, get some legal advice.

I have a house where there is a freehold and a leashold title and it seems I own both. I assumed they would be merged as there is no need for a leasehold, but when we moved the ownership (within the family) a few years ago the solcitor wouldn't merge them; I think he said the lender wouldn't allow it, but it makes no difference to me.

havens havens

14:01 PM, 10th May 2024, About a month ago

Yes, you're correct that transferring the freehold to a limited company is a common solution in this situation. However, it's essential to consult with legal and financial advisors to understand any tax implications and ensure compliance with regulations. They can help navigate the process and address any potential complications, especially considering the rental income from the shop.

Judith Wordsworth

14:14 PM, 10th May 2024, About a month ago

"I cannot be the leaseholder of my flat and the freeholder of the property (including my flat) at the same time."

Of course you can, and you do not have to own the freehold in a company name. In essence you own the the building and there is a lease for the upstairs flat, and maybe a lease re the shop.

The shop may be freehold, but let under a full repairing and insuring lease. Any tenancy over 7 years requires it to be a lease and registered at HM Land Registry. But the ownership is still retained by the freeholder.


18:14 PM, 10th May 2024, About a month ago

Sorry but you cannot own your lease and the freehold in the same name. The Freehold interest is severed from leasehold interest and a mortgage is only secured on the lease as an asset. Lenders will not lend on a freehold where a lease has been granted.


18:26 PM, 15th May 2024, About a month ago

Reply to the comment left by Kizzie at 10/05/2024 - 18:14
I think you are right.
It is to do with the feudal concept of seisin.
There would be confusion: where is the seisin.
In a straightforward case, the doctrine of merger would apply.

Graham Bowcock

13:16 PM, 16th May 2024, About 4 weeks ago

I have just checked on one of my properties. We bought it many years ago, but in 2020 put it into a limited company. We have two separate titles (each with their own LR number), one for freehold and one for leasehold. The proprietor (my company ) is the same on both.

I too understood they would be merged, but my solicitor said not.


13:07 PM, 18th May 2024, About 4 weeks ago

You can't own both in identical names simply because you cannot have a contract with yourself or between other identical parties. You do not need a company. Those who say they have both in identical names presumably have effectively merged by cancellation of the lease even though the titles say otherwise. This is lazy or poorly-informed conveyancing or the names are not exactly identical and those affected should seek advice, as it will probably have to be rectified before or during a sale. The simplest option is for the freehold to be held jointly with someone else in a 99:1 split. Not your father if you will inherit his share as the problem will arise again.
Any solicitors care to comment?

Who will benefit from the shop income after this takes place?

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