Better to sell house as 1 property or split into 2 flats?

Pheath20

Bit confused at the moment and writing for some advice. My mother owns a house in North London and one day in the future (after she's no longer here) my brother and I will need to sell it. The house was converted into 2 flats by my grandparents back in the 1960s, currently a tenant lives in the ground floor flat and my mum occupies the upper flat.

I've had conflicting advice from various estate agents as to whether it would be better prior to sale (in terms of increasing it's value) to recovert it back into 1 family house. One estate agent said as it currently is, it would be classified as a Commercial Property and therefore only an investor could buy it as nobody could get out a regular mortgage on it unless we recoverted it whereas other estate agents are saying as long as we took out one of the kitchens (currently 2 kitchens in the house) we should be fine selling it as it is and a regular buyer could easily get a mortgage out on it.

Up until now I just thought whoever bought it would gut it and redesign it as they wished but am wondering if quite a lot would be devalued off the price if a lot of work needed doing. The estate agent who felt recoverting back to 1 house was a good idea said it was relatively inexpensive to take out the partition, though I'm not so sure. The house has 2 separate doors as you come into the main lobby and could only be sold as 1 property rather than 2 flats (registered as 1 house under land registry).

Any advice gratefully appreciated!

BitterAndTwisted

Pheath20 wrote: »

I've had conflicting advice from various estate agents as to whether it would be better prior to sale (in terms of increasing it's value) to reconvert it back into 1 family house.

One estate agent said as it currently is, it would be classified as a Commercial Property and therefore only an investor could buy it as nobody could get out a regular mortgage on it unless we reconverted

Honestly, this is utter twaddle unless you have left out something extremely pertinent from your post.

As a general rule two flats would achieve a better selling-price than one house but there are complications. Like splitting the house up into separate leaseholds at the Land Registry before selling. Another factor might be the local neighbourhood, and how scarce decent family-sized homes might be. You'd also have to ensure the conversion complies with planning permission if required and Buildings Regulations before putting them up for sale.

This is all assuming the tenant downstairs doesn't enjoy a protected one and is on an AST.

Doozergirl

Do these flats have separate council tax bands? What about utility meters? Postal addresses?

I think you'd be far better off if you spoke to the solicitor who is going to do your conveyancing beforehand. The estate agents sound a bit clueless.

The legals of formally splitting the title into two leasehold flats and a freehold can be done by your solicitor, that isn't a problem at all. When you convert a property into flats, this doesn't get done until you're actually selling to someone as it's easier to assign new leases.

But, what you need first is some kind of confirmation on the Local Authority's Planning side that the flats are already classed as two separate dwellings. Two flats should always be worth more than one house.

Where it gets complicated is if the local authority see it as one house and you want to sell as two flats. The cost of converting a house into flats and conforming to building regulations would be upwards of £50,000+.

If the LA class it as one house then removing the partition and kitchen, then selling as one would be simpler.

Pheath20

Thanks so far for your responses, much appreciated.
There was no formal planning permission sought when the house was split into 2 flats back in the 60s but yes, the utility meters are separate, am not sure about the council tax bands although know the tenant pays her own council tax. Mail usually comes to upper flat or ground floor flat but it is definitely classified as 1 house according to the land registry. i'll definitely check with the LA how how they regard it, at present it's just one freehold, not 2 separate leases.
The house is in quite a sought after road in London where i think family homes are in demand so had always thought the fact it was split into 2 could be a hindrance so interesting to read your comments to the contrary.

Doozergirl

You can check the VOA website right now to see if there are two council tax bandings. Put in the postcode and check the street.
http://www.voa.gov.uk/cti/InitS.asp?lcn=0
What does it say?

The land registry thing is a red herring as it doesn't really matter. while the entire building remains in one ownership, there is no benefit to splitting the title. A solicitor will charge accordingly for it and no lease needs to be created until a sale takes place. Your family never had need to split it, that is why it's still one house to the land registry.

Pheath20

Thanks doozergirl, it's listed as 20 and 20A but the two council tax bandings are the same (E). So does that mean it's def classed as two separate dwellings and no point in me ringing LA planning as they'll just say the same?
Guess, it would require a lot of research at point of sale whether it's worth formalising it and creating two separate leaseholds to sell it as two separate flats or otherwise recoverting it back to 1 house.

mumps

Counting your chickens before they hatch springs to mind. Maybe your mother will outlive us all and leave her house to a handsome young lover she has yet to meet. Or maybe she has already met him and hasn't told you. Seriously I think you shouldn't spend too much time planning what to do when you mother dies. It is a bit morbid.

Pheath20

Mumps - it was actually my mum who strongly recommended i researched this. I have been her carer for the last 3 yrs due to disability and prior to that a carer for my dad with Alzheimers so left my job some yrs ago and my mum has always been worried at the financial sacrifices i've made (though willingly). I'm hoping she will live many yrs longer, i'm extremely close to her, but sometimes a bit of forward planning isn't a bad thing especially when we've quite a complicated situation. Am only fact finding at this stage, that's all - really not meant to sound morbid but can see how it might come across when my enquiry is read without knowing any background. hope this explains a bit.

Doozergirl

Pheath20 wrote: »

Thanks doozergirl, it's listed as 20 and 20A but the two council tax bandings are the same (E). So does that mean it's def classed as two separate dwellings and no point in me ringing LA planning as they'll just say the same?
Guess, it would require a lot of research at point of sale whether it's worth formalising it and creating two separate leaseholds to sell it as two separate flats or otherwise recoverting it back to 1 house.

If they have a line each then you're most of the way to having two flats. Separate bills, separate addresses, separate council tax bandings for several years.

At this point, work will be involved to sell as one or two. To sell as two, you need to speak to the council. You may want to ask them first to search their archives to see if there is actually planning permission. If not, then you may need:
a) a certificate of lawfulness which will replace planning permission
b) a certificate of regularisation from building control
c) your solicitor to split the title

To sell as one, I think you may need planning permission to convert back to one house and to remove the partitions and extra kitchen (ie. the evidence of flats) so that it is mortgageable as a house.

To be fair to the estate agents, it probably isn't worth as much as it should be, but developers would love it. It's a problem that can be solved once a decision is made as to whther you're selling one property or two. Family homes are sought after in London, but then so are flats - probably moreso as they are more affordable to more people.

You'll need valuations on both - one house, two flats.

Doozergirl

Pheath20 wrote: »

Mumps - it was actually my mum who strongly recommended i researched this. I have been her carer for the last 3 yrs due to disability and prior to that a carer for my dad with Alzheimers so left my job some yrs ago and my mum has always been worried at the financial sacrifices i've made (though willingly). I'm hoping she will live many yrs longer, i'm extremely close to her, but sometimes a bit of forward planning isn't a bad thing especially when we've quite a complicated situation. Am only fact finding at this stage, that's all - really not meant to sound morbid but can see how it might come across when my enquiry is read without knowing any background. hope this explains a bit.

You're right to do this now. It is complicated and nobody needs to be researching this when grieving as well. Good luck to you, and mum

Pheath20

Doozergirl, yes the two flats/ council taxes listed on different lines. I'm pretty sure no formal planning permission was sought when my grandparents did the conversion back in the '60s.
Because when the time comes we'll be liable for Inheritance Tax which i understand needs to be paid within 6months and the property value will be taken into account (though it could be difficult to value it if it's not in a selleable condition and we've not decided what we want to do with it) hope either option can be achievable within that timeframe. Know we can spread out IHT payments over longer period but then a lot of interest is payable.
Really appreciate how comprehensively you've explained things.
PS. Thanks for your addendum. When mum passes i will be completely devastated and definitely not in the right frame of mind to research things so agree feel it's much better to get a feel for where the land lies now (excuse the slight pun!)