Leasehold Merge

Maizy1974

hi

Does anyone have experience with purchasing a leasehold when you already own the freehold? We own the leasehold to a flat in a house with two flats. We own share of freehold as well. The downstairs neighbour is selling and we plan to purchase her flat which would mean we own the whole house. Currently the freehold is held by the three of us (me, my husband and the downstairs neighbour).
We are trying to decide whether to keep it as two leases and rent the lower flat to a tenant, or whether to merge everything into a single freehold property.
Has anyone done something similar? Is it difficult to do and does the council get involved?
Also - is there anyway we might be considered exempt from the second home rate of stamp duty if we are actually buying the rest of a property we already own? (I know this is probably a long shot but just wondering if anyone successfully argued that position!).
Is it the Land Registry who would merge the properties?
Thanks for any help and advice!

eddddy

Maizy1974 wrote: »

We are trying to decide whether to keep it as two leases and rent the lower flat to a tenant, or whether to merge everything into a single freehold property.

Do you mean turn it into a single house (dwelling)?

Usually, you would lose value by doing that. Two flats would be worth more than one house.

Also, do you have a mortgage on your current flat? If so, it would almost certainly be a mortgage on the leasehold title.

If you want to cancel that lease on your current flat, it would mean paying off that mortgage, and applying for a new mortgage on the freehold property.


I guess the key question is what your long-term plans are for the building/flats. That might help you decide the best steps to take.

SDLT_Geek

Maizy1974 wrote: »

Also - is there anyway we might be considered exempt from the second home rate of stamp duty if we are actually buying the rest of a property we already own? (I know this is probably a long shot but just wondering if anyone successfully argued that position!).
Is it the Land Registry who would merge the properties?
Thanks for any help and advice!

Even if your plan is to convert the building after your purchase of the second flat so that it all becomes one dwelling, the extra 3% SDLT will still apply as you are buying an additional dwelling at the point of the completion of your purchase. There is an example in the HMRC Manual exactly on this point.

da_rule

Merging the leasehold interests back into the freehold title does not impact on your ability to rent the other flat out, it will still retain a separate postal address, utility supply etc.

All merging will do it determine (bring to an end) the leases, then when you want to sell, you can either sell the freehold as a single entity or grant new leases and either sell or retain the freehold.