Help please, Freehold House with Leasehold apartment below

tomfrancis19

Hello all, im in need of some information and help before i proceed with a potential offer on a property.
The house and apartment are currently being run as a business as holiday lets, this is a 4 bedroom detached house, with a 1 bedroom apartment underneath. The current owners bought the house years ago as freehold, then converted the coal cellar underneath into a 1 bedroom apartment, the 4 bedroom house is freehold and the 1 bed apartment is leasehold, the leasehold is of course owned by the current owner of the freehold house aswell.
Can i buy this house and return them both back to residential dwellings for myself and my family?
Is there a cost to change the apartment leasehold back to freehold with the rest of the 4 bedroom detached freehold house? or can it even be done?
Would i be charged 2 council tax bills as both dwellings have separate entrances? i.e. no internal staircase from house to apartment below.
And finally any other information anyone else may have about this situation would be extremely helpful.

thankyou

Annisele

Are you a cash buyer, or will you be needing a mortgage? You're unlikely to be able to get a standard residential mortgage if your aim is to buy two properties and merge them into one (even if they did start out as just the one property).

user1977

tomfrancis19 said:

The current owners bought the house years ago as freehold, then converted the coal cellar underneath into a 1 bedroom apartment, the 4 bedroom house is freehold and the 1 bed apartment is leasehold, the leasehold is of course owned by the current owner of the freehold house aswell.

Why "of course"? Why (and how) did they create the lease if they retained ownership of the whole thing? Had they sold it and then bought it back?

NameUnavailable

Yes - council tax would be payable on both properties.

tomfrancis19

user1977 said:

tomfrancis19 said:

The current owners bought the house years ago as freehold, then converted the coal cellar underneath into a 1 bedroom apartment, the 4 bedroom house is freehold and the 1 bed apartment is leasehold, the leasehold is of course owned by the current owner of the freehold house aswell.

Why "of course"? Why (and how) did they create the lease if they retained ownership of the whole thing? Had they sold it and then bought it back?

So as far as im aware the current owners, a lady and a gentleman own the freehold together to the house above, when they decided to convert the coal cellar into an apartment they decided to title that as leasehold and the husband is the leasholder, the lease would go with the house which is freehold when it is sold. So if i was to buy the house i would hold both freehold and leasehold myself, i do not want to let either out, just live in the whole property.
So can i do this? Can i extinguish the leasehold myself once i own the leases?
is it expensive to extinguish? And can all of this be done or am i wasting my time chasing this property?
thankyou.

user1977

tomfrancis19 said:

user1977 said:

tomfrancis19 said:

The current owners bought the house years ago as freehold, then converted the coal cellar underneath into a 1 bedroom apartment, the 4 bedroom house is freehold and the 1 bed apartment is leasehold, the leasehold is of course owned by the current owner of the freehold house aswell.

Why "of course"? Why (and how) did they create the lease if they retained ownership of the whole thing? Had they sold it and then bought it back?

if i was to buy the house i would hold both freehold and leasehold myself, i do not want to let either out, just live in the whole property.
So can i do this? Can i extinguish the leasehold myself once i own the leases?
is it expensive to extinguish?

No, the conveyancing side of it should be relatively straightforward. As mentioned above though, the difficulty is likely to be getting a mortgage (if you need one) as normal residential lenders will consider it too quirky/risky to be buying two properties simultaneously, even if your plan is to merge them together.

tomfrancis19

user1977 said:

tomfrancis19 said:

user1977 said:

tomfrancis19 said:

The current owners bought the house years ago as freehold, then converted the coal cellar underneath into a 1 bedroom apartment, the 4 bedroom house is freehold and the 1 bed apartment is leasehold, the leasehold is of course owned by the current owner of the freehold house aswell.

Why "of course"? Why (and how) did they create the lease if they retained ownership of the whole thing? Had they sold it and then bought it back?

if i was to buy the house i would hold both freehold and leasehold myself, i do not want to let either out, just live in the whole property.
So can i do this? Can i extinguish the leasehold myself once i own the leases?
is it expensive to extinguish?

No, the conveyancing side of it should be relatively straightforward. As mentioned above though, the difficulty is likely to be getting a mortgage (if you need one) as normal residential lenders will consider it too quirky/risky to be buying two properties simultaneously, even if your plan is to merge them together.

Ok, thanks for that information.
so i could buy them, then extinguish the leasehold and keep it as a total freehold?
im still waiting to hear back from my mortgage lender, they have all the information about what the property/properties currently are and what i am going to do with them if i am able to make an offer.

SDLT_Geek

There can be quirks with SDLT buying a property which comprises two dwellings. Sometimes the extra 3% can apply where one would not expect it to.

This is especially the case where the lease is held by a different legal entity to the freehold.  Look out!

tomfrancis19

SDLT_Geek said:

There can be quirks with SDLT buying a property which comprises two dwellings. Sometimes the extra 3% can apply where one would not expect it to.

This is especially the case where the lease is held by a different legal entity to the freehold.  Look out!

Can you explain this to me a little more please? Im out of my depth in knowledge on all of this. Thankyou

SDLT_Geek

The 3% surcharge can apply where “at the end of the day of the transaction” you own two dwellings.  In many cases the rules about “subsidiary dwellings” can help.  But they only help where both dwellings are in the same “transaction”.  But here with different sellers there will be two transactions.
There is guidance about the 3% surcharge indexed on this page: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09730

tomfrancis19

Is it a long confusing process to change a property that is currently a holiday let as a business and has been for 10+ years back into a residential property? Thankyou