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jabfish
Posts: 29 Forumite
I would be really grateful for some advice and clarity please!
I currently own (residential mortgage) a Ground Floor Flat in an old victorian building. There is one flat above and one flat below. The flats are all leasehold and we each own a third equal share of the Freehold. The property was converted from a whole victorian house into 3 separate flats in 1977. My GF flat shares a common entrance with the First Floor flat. The basement flat is self contained with it's own entrance.
My girlfriend and I are looking to purchase the First Floor flat with a view to then converting the 2 flats to a single dwelling. This would "just" involve removing a stud wall next to the original staircase and then repurposing the kitchen upstairs. I realise there are other implications around boilers, water meters, gas, council tax, planning permission etc.
My queries relate to the financing and legal matters concerning the amalgamation. We are planning on purchasing the upstairs flat in my girlfriend’s name so as to avoid the additional 3% Stamp Duty I would incur as a second home (she doesnt currently own a property). However, would having different owner names cause issues with the Land Registry further down the line when we look to amalgamate the 2 titles?
In terms of lenders, what would be the best way to approach this? I feel there’s a Catch 22 situation - carrying out the physical conversion would presumably not be allowed by the lenders….but I’m not sure we can amalgamate the titles without physically carrying out the work! There’s a chance that we could scrape enough cash together to pay off my existing mortgage (with an annoying £12k early redemption charge) and then have a mortgage on upstairs flat only….but I’m not sure that really solves anything other than just having one lender (which we could probably create anyway by taking out second mortgage with same lender).
I should say that a cant see any solution for these issues at point of purchase but perhaps Ive overlooked something - grateful for any advice! Thank you.
I currently own (residential mortgage) a Ground Floor Flat in an old victorian building. There is one flat above and one flat below. The flats are all leasehold and we each own a third equal share of the Freehold. The property was converted from a whole victorian house into 3 separate flats in 1977. My GF flat shares a common entrance with the First Floor flat. The basement flat is self contained with it's own entrance.
My girlfriend and I are looking to purchase the First Floor flat with a view to then converting the 2 flats to a single dwelling. This would "just" involve removing a stud wall next to the original staircase and then repurposing the kitchen upstairs. I realise there are other implications around boilers, water meters, gas, council tax, planning permission etc.
My queries relate to the financing and legal matters concerning the amalgamation. We are planning on purchasing the upstairs flat in my girlfriend’s name so as to avoid the additional 3% Stamp Duty I would incur as a second home (she doesnt currently own a property). However, would having different owner names cause issues with the Land Registry further down the line when we look to amalgamate the 2 titles?
In terms of lenders, what would be the best way to approach this? I feel there’s a Catch 22 situation - carrying out the physical conversion would presumably not be allowed by the lenders….but I’m not sure we can amalgamate the titles without physically carrying out the work! There’s a chance that we could scrape enough cash together to pay off my existing mortgage (with an annoying £12k early redemption charge) and then have a mortgage on upstairs flat only….but I’m not sure that really solves anything other than just having one lender (which we could probably create anyway by taking out second mortgage with same lender).
I should say that a cant see any solution for these issues at point of purchase but perhaps Ive overlooked something - grateful for any advice! Thank you.
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Comments
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I am no expert but here are my thoughts.
- Who owns the freehold - you will need permission this will cost you whatever they may choose to ask for?
- 2 individual owners cannot amalgamate a property that I'm aware of as your legal responsibilities would become blurred & unmanagable
- Both properties would need to therefore be owned by the same people
I cannot imagine Mr/Mrs top floor will be very impressed. Why don't you just buy a place together.
What you will save in stamp duty by not being involved you will incur in other costs to put this proposal into action0 -
I currently own (residential mortgage) a Ground Floor Flat in an old victorian building. There is one flat above and one flat below.
My girlfriend and I are looking to purchase the First Floor flat with a view to then converting the 2 flats to a single dwelling.
Will your council allow this change?0 -
Will the value of the combined flat be greater than the value of the 2 flats? If not, then why bother?
Mortgage wise the easiest would be to buy the top floor flat in GF name, do the work, then remortgage the property as one. You may find you need to add each other to your individual deeds first. There may be stamp duty implications in the transfer.I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
HampshireH wrote: »I am no expert but here are my thoughts.
- Who owns the freehold - you will need permission this will cost you whatever they may choose to ask for?
- 2 individual owners cannot amalgamate a property that I'm aware of as your legal responsibilities would become blurred & unmanagable
- Both properties would need to therefore be owned by the same people
I cannot imagine Mr/Mrs top floor will be very impressed. Why don't you just buy a place together.
What you will save in stamp duty by not being involved you will incur in other costs to put this proposal into action
Thanks for reply. My understanding was that the freehold is equally owned between the 3 flats and I would need to seek permission from the basement flat.
Good to know about individual ownership. thanks0 -
Will the value of the combined flat be greater than the value of the 2 flats? If not, then why bother?
Mortgage wise the easiest would be to buy the top floor flat in GF name, do the work, then remortgage the property as one. You may find you need to add each other to your individual deeds first. There may be stamp duty implications in the transfer.
It probably will be but increasing value is not my main interest - I live in central Hove and very hard to find suitable houses.
Thanks - I'm concerned though that lenders would frown upon the conversion work being conducted (prior to remortgaging).0 -
You may not mind about the value but the mortgage lenders will. Each flat is security for each mortgage, you can't devalue them without the lender's consent.It probably will be but increasing value is not my main interest - I live in central Hove and very hard to find suitable houses.
Thanks - I'm concerned though that lenders would frown upon the conversion work being conducted (prior to remortgaging).
I would suggest reading your mortgage terms and conditions. I'd suspect they say you require the lender's consent for works like you propose.
Also the final value will affect the size of mortgage you can get.0 -
I'm concerned though that lenders would frown upon the conversion work being conducted (prior to remortgaging).
They undoubtedly would. You'd probably have to find some temporary source of funding while you do the development.
And no, having each floor of the flat in a different name is not going to be acceptable to any lender! Unless either of you can afford it in one name then you'll need to put the whole thing into joint names.0 -
Sorry I got confused as to who had what flat. If I was the basement flat and 3rd freeholder i would object. 1 because of the disruption of possibly having a family living above me and 2 because I would become a minority freeholder.0
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HampshireH wrote: »Sorry I got confused as to who had what flat. If I was the basement flat and 3rd freeholder i would object. 1 because of the disruption of possibly having a family living above me and 2 because I would become a minority freeholder.
Effectively you would be in the minority anyway if each half of a couple owned the other two flats.I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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