Multi Unit Freehold Block (MUFB) Investments?
Hi All, I have invested in a few MUFB last year. They are historic conversions of terraced houses in London with planning permission to be used as two flats with separate utilities, council tax etc.
I am extending and upgrading them at the moment and I am holding two of the properties in a LTD company and one in my own name.
I have been deliberating if I should create leaseholds for the flats in the house but have been shying away from doing so as I am told the leasehold creation will trigger SDLT again for each unit. As these are London properties this would be a fairly high cost. Add to this all the legal costs etc I didn’t think it was worth it.
I appreciate that my mortgage rates etc may be a little higher and funds I can extract lower due to a MUFB valuation discount compared to a valuation of two independent units.
I should mention that I bought this property in cash without debt at the moment. As soon as the extensions and renovations are completed I will mortgage them though.
I would love to hear from people with experience in this field if my assumptions so far are correct and most importantly: I have been told I will just be able to issue leases to a future buyer as and when I selling.
My plan is to rent and hold these properties for 5 years and then sell them, ideally each flat individually for max return.
Is the advice I received sound?
Thank you for your thoughts.
Bruno
Comments
Have Your Say
Every day, landlords who want to influence policy and share real-world experience add their voice here. Your perspective helps keep the debate balanced.
Not a member yet? Join In Seconds
Login with
Previous Article
Can another leaseholder serve me a Section 20?Next Article
Universal credit chaos leaves tenants in tears
Member Since August 2015 - Comments: 226
10:49 AM, 19th January 2024, About 2 years ago
I have numerous similar buildings that I have no intention of selling. However, if you are describing S257 Housing Act HMOs, i.e. self contained units that cannot be proved to comply with the 1991 building regulations, your conversions/updates need to bring these properties up to building regulation standard and be able to prove such in the future. You can employ independent building inspectors who will do the certification. These building are HMOs but probably not licensible unless the local council has its own scheme. So for fire and safety you must comply with the Housing Health and Safety Rating System and meet the appropriate fire precautions. For your future sale make sure you layout of utilities enables easy access and all the appropriate convenants are dealt with at the build rather than the sale stage. Speak early and now to your legal expert re covenants and utilities and build accordingly.
Member Since January 2024 - Comments: 6
11:31 AM, 19th January 2024, About 2 years ago
Reply to the comment left by at 19/01/2024 – 10:49
Hi reader, Thank you for your advice. As I am doing a lot of work in these properties to increase their size and up their standard I have BC involved who will certify the work. Is there a specific standards that needs to be met or a specific certificate to be issued? Will BC also certify H&S and fire rating system?
Thank you
Member Since March 2016 - Comments: 85
8:55 AM, 20th January 2024, About 2 years ago
If you do this correctly then SDLT and Capital Gains may not apply.
https://www.taxinsider.co.uk/creating-new-leases-on-freehold-flats-what-taxes-will-i-need-to-pay-1
Member Since January 2024 - Comments: 6
10:16 PM, 24th January 2024, About 2 years ago
Do you know a solicitor who can structure this?
Member Since August 2015 - Comments: 226
2:24 PM, 25th January 2024, About 2 years ago
Hello Bruno
I use city commercial solicitors who charge a whack but you get what you pay for. Try Shakespeare Martineau.
Don’t forget they are not your friends but will provide advice. Therefore keep the correspondence to the point.
Member Since March 2016 - Comments: 85
8:23 PM, 27th January 2024, About 2 years ago
If you do a google search for ‘splitting freehold title into new leases’ you will get quite a few options to speak to and see who you think is right for you