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    • osteodave
    • By osteodave 12th Jul 17, 11:37 AM
    • 1Posts
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    osteodave
    splitting second dwelling from main dwelling
    • #1
    • 12th Jul 17, 11:37 AM
    splitting second dwelling from main dwelling 12th Jul 17 at 11:37 AM
    Hi
    I am looking for some advice regarding the splitting and sale of a two bed bungalow to my daughter from my main plot.
    The issue is that the sale of the smaller dwelling would be at about half of its value as my daughter could not afford to purchase at full value. The sale is needed to fund the finishing off of the main building that is only half done.
    The value of the original plot containing the two dwellings should have increased substantially but the main dwelling although three times the original square footage is unfinished and the only habitable areas are the original ones.
    I am unsure as to how i would approach my lender as I am worried that the unfinished state of the main dwelling may not be perceived as increasing the value by the amount required to retain our current mortgage deal
    We are not in a position to remortgage as our current income would not be sufficient on paper to receive an offer.
    Who would i contact in this instance for the correct advice?
    Thanks in advance for any advice you can offer.
    Dave
Page 1
    • G_M
    • By G_M 12th Jul 17, 11:43 AM
    • 40,072 Posts
    • 45,761 Thanks
    G_M
    • #2
    • 12th Jul 17, 11:43 AM
    • #2
    • 12th Jul 17, 11:43 AM
    I seriously doubt your mortgage lender will agree to this sale, unless you have a lot of equity in the current Title.

    If not, reduce the current mortgage.

    Who to contact? Well, no financial adviser will be able to help given the negative factors you've listed, but are you sure no one else would offer a remortgage?
    • 00ec25
    • By 00ec25 12th Jul 17, 12:08 PM
    • 4,279 Posts
    • 3,602 Thanks
    00ec25
    • #3
    • 12th Jul 17, 12:08 PM
    • #3
    • 12th Jul 17, 12:08 PM
    so you have "a" plot of land on which there are 2 separate self contained properties? One is complete and one is still a building project?

    you propose to sell the complete property (at undervalue) to your daughter.

    You need to see an accountant because it is very likely that you will be liable for capital gains tax and the discount will have inheritance tax implications as well.
    • Ozzuk
    • By Ozzuk 12th Jul 17, 12:20 PM
    • 1,056 Posts
    • 1,590 Thanks
    Ozzuk
    • #4
    • 12th Jul 17, 12:20 PM
    • #4
    • 12th Jul 17, 12:20 PM
    I doubt your lender will lend on an unfinished building, almost certainly not against your current product. The only way I can see of doing it is to split it at point of sale, use the money from your daughter to clear mortgage (if it does) and secure a new self build mortgage on the remaining property. Not impossible but not easy and depends on figures involved and current condition of house. If you can get a kitchen in it will likely help.

    Talk to a broker, this isn't straightforward!
    • Thrugelmir
    • By Thrugelmir 12th Jul 17, 1:19 PM
    • 54,289 Posts
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    Thrugelmir
    • #5
    • 12th Jul 17, 1:19 PM
    • #5
    • 12th Jul 17, 1:19 PM
    Did you seek your lenders approval before commencing the building works.
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • Ozzuk
    • By Ozzuk 12th Jul 17, 1:33 PM
    • 1,056 Posts
    • 1,590 Thanks
    Ozzuk
    • #6
    • 12th Jul 17, 1:33 PM
    • #6
    • 12th Jul 17, 1:33 PM
    Did you seek your lenders approval before commencing the building works.
    Originally posted by Thrugelmir
    thats a good point, I'm sure they did (or at least hope so) as building works can seriously devalue a property when in progress.
    • lincroft1710
    • By lincroft1710 12th Jul 17, 4:08 PM
    • 9,401 Posts
    • 7,366 Thanks
    lincroft1710
    • #7
    • 12th Jul 17, 4:08 PM
    • #7
    • 12th Jul 17, 4:08 PM
    Is there definitely no planning restriction preventing the sale of the bungalow
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