Freehold to Split Lease Issues

Hi Allan

Your solicitor should be advising you and sorting all of this for you.

If you lack confidence in their abilities have a chat to our Joint Venture partners >>> http://buytoletconveyancing.co.uk/
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Hi Allan,

You also need to make sure the 3rd floor extension is not affecting the security of the BTL lender in some way eg affecting entrances, taking floor area etc.

Dear Allan
Mark is right that you need to get a solicitor to sort it out. Your case is far from straightforward.There are numerous issues to consider and a proper fee will be substantially more than a "simple" conveyancing purchase fee. If your solicitor offers to do the whole job for a standard conveyancing fee I doubt they can deal with the issues properly. Once you sell (and to some extent mortgage) a long lease the drafting is fixed for the next 99 or 125 years or whatever the lease length. (As I tell our juniors, get this wrong and you can cause problems for generations of people who have not yet been born!)

First, you need to grant the two leases to someone other than the freeholder as an owner cannot grant a lease to himself. You might want to take the freehold in the name of a company you control and grant leases to you personally. Does your contract allow you to do this?

Second you need to allocate a fair price for the two leases. These figures will be your base cost for CGT.

Next you need to decide about repairs and maintenance of the building. Who will be responsible for doing the work and how will the cost be shared? A proper service charge should be put in place.

Insurance also needs to be considered and you need the right sort of policy. Speak to a specialist broker (DO NOT go online and buy the cheapest policy - it will almost certainly not be suitable.)

Looking ahead if you build an extension, you need to legislate for doing the works (what will happen if there is disruption? Is access needed to the flats to do the works?) Then you need to cater for varying the two leases to change the service charge arrangements.

You might say "Why do I need to do all this, as I control everything?" The problem is that the mortgagee(s) of the two leases will want to ensure that the leases can be sold as stand alone leases. You could offer to charge the freehold as well but that involves two borrowers (freeholder and leaseholder) and is not straightforward from a BTL lender's perspective. There are other conveyancing issues that ought to be considered as well.

It is possible to cut corners and save fees. You risk ending up with a set of documents that don't work properly. If your property is in London in a rising market you may find someone to take the property off your hands. You might even make a profit. You might also end up with an unsaleable mess as I have seen from bitter experience. The cost of sorting it out will likely be several times the cost of doing job properly (which itself may be several times the cut-price fee some firms will offer to get your business).

Hi Mark and Neil. Details sent to Buytoletconveyancing.
Good thoughts Neil. - I have ample room at the rear to have shared or even individual stairs.. Maybe its wisest to wait for the 3rd floor until mortgages for the ex shop and the flat are running and then discuss it with the mortgage companies.
Ta.

Hi Ian. Wow that is exactly what I wanted to know. Long since learnt to ask questions and even more importantly to listen to he answers
Re who is the freeholder. I new this wa mega important and have been through it with my accountant and a good IFA neither made the points you have! - My goal is that these be in my wifes' name as everything else we have is mine or ours. I do have a little company set up JIC for property purchases but am concerned about using it as there is no CGT allowance with Ltd companies. Buying at 150k (110 for the flat and just 40 for the shop). Converted value is 220k/240k Ahhhhh sell shop lease to her before conversion. Do I need a clever accountant?
Allan

Dear Allan
I am interested to know more about the shop being allowed under Permitted Development to become a flat. I own a large property sounding similar to yours and I am trying to find out if I can convert the shop into living accommodation. We own the property outright and live in the upstairs. Who have you used as I am not finding our local Planning department very quick or helpful (enough said there) and no one has mentioned this would come under Permitted Development. Anyone's advice would be much appreciated on this, I would prefer to turn the whole property into one house. I do not have a mortgage and no intention of getting one on it. I did email the Buytoletconvenyancing link a couple of weeks ago but haven't heard back to date. Any help very much appreciated, thank you

Reply to the comment left by "Charlotte McDuff" at "09/02/2015 - 12:23":

The shop is A1 use

Hi I have a friendly group of lads who advise me - look them up tpexperts.org and give them a call. they are realy helpful and very knowledgeable. - I've just come from there office and I think they are all out tomorrow so do leave them a message.

As mentioned by Charlotte if its currently A1 or A2 then it can be changed to A3 Residential. - Slight differences on what can be done based on A1 or A2.
If its a real strong High street location the council may fight it. Dont be put off by my limitations as there is more than one way to skin a cat!
Do note though that the regulation runs out in May of next year, although the conservatives said they would probably extend it if they get in! . O Ummm. -
Good luck and let us know how you get on. Shout if you need more help. Allan

Reply to the comment left by "allan wadsworth" at "09/02/2015 - 17:33":

Thanks Allan, I just got this whdn I googled them so any more info would be much appreciated - Sorry, the website tpexperts.org cannot be found and good luck with your plans I will watch this space!

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