Can I change from freehold to leasehold?

heimat43

Some time ago I inherited a large 2-storey house. Somebody suggested that in order to make some money I could split the house into 2 and sell the lease on the top storey for a limited period. I would still be able to live in the bottom half of the building.

Now, some years later, I am attempting to draw down some income on my property. I have made a deal with an estate agent whereby he gets a percentage of the selling price when the property is sold in return for a large cash loan.

I now discover that I cannot do this because I do not have the lease to my half of the house. When I went to my solicitor to make arrangements for splitting the house into 2 he did not give me a lease for my half of the property. I didn't think anything about this at the time but now it transpires that I only have freehold on my part of the house. Mortgage companies will only grant loans on leasehold flats which means that I can only sell to someone who has ready cash to pay for the property right out.

Is there any remedy for my situation?

Senior_Paper_Monitor

Sue the solicitor (or the 'somebody' who gave you the original duff advice)?

On a more practical vein it should be possible to resplit your current freehold into freehold and leasehold (not my are of expertise but I am fairly confident that can be done - but will cost).

Senior_Paper_Monitor

I have received your PM indicating that you didn't understand my comment.

The first bit indicates that it appears you were badly advised in the first place - you may have recourse to them to correct it.

The correct structure would be an all encompassing freehold with two leaseholds.

If that had been done you would currently hold a freehold plus your flat on leasehold (as you appear to understand from your original message).

I can see nor reason that the current freeholder (i.e you)cannot split another bit (exactly as you did initially, except to your flat this time) off as a leasehold which you would transfer to yourself.

As I indicated it may not be the cheapest of exercises - and you will have to meet the cost if you can't get the original party who handled the first split to put the situation right.

You really need to speak to a conveyancing expert - I can introduce you to one if you wish (and check with him prior to doing so as to whether I have my understanding of the solution correct and what he would charge).

tomatopuree

For what it is worth I do not think that it is obvious that the solicitor has made a mistake here, it really depends on the original instructions.
It is perfectly reasonable that the OP owns the freehold of the building (including the downstairs 'flat') subject to the lease of first floor. The OP could sell the downstairs flat to anyone and grant them a long lease (something like 125 or 999 years). The would still own the freehold of the house. I dont know the terms of the upstairs lease, but assuming there is ground rent on the lease then the OP could have a similar ground rent on the downstairs lease and have a little income each year, or, the OP could transfer the freehold to the two leaseholders for a nominal sum at completion of the sale of the downstairs flat.

All sounds perfectly reasonable to me. In fact there would have been potential issues in the OP owning the freehold and granting a lease to herself of the downstairs flat as this could be deemed to merge the freehold and the leasehold of the downstairs flat and the OP would be back to square one.

Senior_Paper_Monitor

Mr/Ms Puree,

I suspect I may not have been clear in my posts ....

I have not stated 'it is obvious' that the OP was misadvised (if he was he should 'beat up' on the solicitor and/or the mysterious 'somebody') and have deliberately used terms such as 'appears'.

If I had to guess, then the OP probably indicated that the arrangement was OK (not having given thought to future requirements - that generally is what a good adviser/IFA does).

I do however diagree about potential "issues" about the full initial split - a perfectly normal structure in my experience (but I admit this is not my specialist subject).

tomatopuree

Senior_Paper_Monitor wrote: »

Mr/Ms Puree,

I suspect I may not have been clear in my posts ....

I have not stated 'it is obvious' that the OP was misadvised (if he was he should 'beat up' on the solicitor and/or the mysterious 'somebody') and have deliberately used terms such as 'appears'.

If I had to guess, then the OP probably indicated that the arrangement was OK (not having given thought to future requirements - that generally is what a good adviser/IFA does).

I do however diagree about potential "issues" about the full initial split - a perfectly normal structure in my experience (but I admit this is not my specialist subject).

My main point was that there was no need at that stage to grant herself a lease. OP can now sell the ground floor flat with a new lease, thus creating a new leasehold title. The issues I was referring to is that the basic position is that if the same person owns the freehold and leasehold titles then those titles would merge.. yes it is possible to get round this, but at that point I don't think it was necessary, owning the freehold subject to the lease of the top floor is fine and doesn't restrict the OP now either selling OP's freehold interest or creating a new lease