Long Lease - 7 flats

MrJB

I'm offering up some advice to a client on the acquisition of a long leasehold interest which is being sold by a local housing association. The lease comprises 7 flats above a commercial property - I would describe the lease as being relatively commercial insofar as it does not allow the units to be dealt with individually - ie you cannot sell off the flats as single units.

Whilst it may not be of huge interest for this case - I'd hope we can complete before the rules change, but undoubtedly something I will encounter in the future.

My thoughts are that it is defined as a non-residential property for sdlt rating purposes - because of this rule: -
6 or more residential properties bought in a single transaction

But, I then got on to thinking, what constitutes a property? ie in this instance it's a single long leasehold interest albeit that contains 7 residential units. Thoughts?!

AdrianC

The obvious answer would be that there's a freehold for the building, which consists of a commercial unit (maybe on a lease) on the ground floor and a commercial main lease for the entirety of the seven flats. Each flat is then on a residential sub-lease.

I'm a bit confused, though, by the fact you're asking some non-professional, unqualified random strangers about such a fundamental detail of the advice you're being paid to professionally give.

MrJB

Adrian, thanks for coming back so quickly - most appreciate.

The extent of my professional advice is limited to my area of expertise - A Commercial Property GP Surveyor - I will be advising on the condition of the building and the likely total cost of refurbishment works and the value of the interest (obviously tempered by the impact of SDLT). I am pretty confident of my position - insofar as there is one commercial long lease which relates to seven dwellings which are all unoccupied and I therefore think SDLT will be charged in accordance with the non-domestic rate rather than the new rate for BTL property.

My reasoning for asking here was that I thought others may have encountered the way in which HMRC deal with the interest - be it as it appears on the Land Registry ie as one interest. Or as it physically is ie 1 interest consisting of 7 units. Logically I would have to presume the latter but was curious if this was something anyone else had encountered. In any event, so you can rest easy I'm sure that my client will take the appropriate advice from a solicitor/accountant!

As an aside, you're indeed correct the freehold is also owned by a different client of mine and let on a commercial tenancy.

AdrianC

I'm assuming your client has a solicitor in the purchase, too?

MrJB

AdrianC wrote: »

I'm assuming your client has a solicitor in the purchase, too?

Your assumption is indeed correct!