Sell shop as leasehold or freehold?

snickpan

I'm going to sell my shop, but keep the flat above it, I own the freehold of the building.
The commercial property agent wants to know if I'm selling the shop as freehold or leasehold, but I'm not sure of the implications.
My heart tells me to hang on to the freehold, but if it's better to sell the shop with freehold to the entire building, I'm happy with that. I assume I'll just become the leaseholder of a flat that I rent out.
I plan to sell the flat in a few years time.

princeofpounds

Forget what your heart says. What matters is facts.


One very important thing to understand is that having a freehold with mixed commercial/residential property actually has legal implications. Specifically the rights of the residential leaseholder to pursue enfranchisement are much lower (unless something has changed in the last few years, which is possible).


So personally I would be keeping it.

snickpan

oh dear, I've read that 3 times and still can't quite understand

But I think you're saying to sell shop as leasehold, thankyou.

AdrianC

You own a building, freehold, that contains a flat and a shop.
You want to sell the shop, but keep the flat.
To do that, you need to legally split the building into three...
- Leasehold flat
- Leasehold shop
- Freehold.

Whether you sell the freehold with the shop, keep it with the flat, or become a joint owner with the buyer of the shop - that's entirely down to your negotiations with any buyer of the shop. Who would probably be an investor looking to let it.

I know what I'd do - I'd be keeping it and retaining control. If it looked like the shop'd not sell without joint ownership, I'd go that way - but no way would I be selling it all.

I'd probably not be selling the shop, though, but letting it.

What PoP is saying is that, as the leaseholder of a flat within a mixed-use building, your rights when it comes to the lease will be different to those of a leaseholder within a purely residential building. I have no idea if that's right, or if it's relevant, but - like I said - I wouldn't be putting myself in that position anyway.

eddddy

princeofpounds wrote: »

Forget what your heart says. What matters is facts.


One very important thing to understand is that having a freehold with mixed commercial/residential property actually has legal implications. Specifically the rights of the residential leaseholder to pursue enfranchisement are much lower (unless something has changed in the last few years, which is possible).

If you're referring to a lease extension, the OP could grant themselves a 999 year lease before selling the freehold - so extension would not be an issue.

If you're referring to acquiring a share of the freehold, since the OP already owns the freehold - they could just sell, say, a 50% share of the freehold. So no need to buy it back later.

lincroft1710

How good is the market for leasehold shops with the freehold owned by an upstairs flat? Why do you not want to sell the shop and flat as a single freehold entity?

snickpan

Not sure how the market is.
Splitting the sale hoping to lessen big tax bills.