Buying 2 properties one plot: mortgage/SDLT/planning/...

cryvate

I am looking into buying a house. I am also considering buying the (small) office owned by the same owner.

For the time being, I would be happy to have it as an office (I work remotely) but medium term I would like to turn it into an annex (it already has plumbing) and maybe add a kitchen (I am an immigrant and would love to have my family over for extended stays with their families!).

For context:
- the office is ~30 m2 and the house is ~90 m2.
- the office has only been an office since ~2008 and was used a storage before then
- the office, the property we are buying and a bunch of other stuff are on one title (I am requesting the title plan, I already have the title register)

I have a few questions:
- Would I be able to get a normal residential mortgage for the house + office? My mortgage broker seems to think so because at least 60% of the property is the main residence.
- Would planning permission be difficult? It is in a conservancy area, but it would require no external work. I guess building regs could be a problem? Is it different because I want it as an annex instead of a dwelling? Can I apply for planning before buying the property? I think this was done when the use of the property was changed for it becoming an office originally (though that was leased/rented, not sold).
- In regards to SDLT, my understanding is that if we buy the properties together, we would pay SDLT twice on the average, however, how does this work with FTB status? I guess I would pay commercial SDLT on the office?
- In regards to LISA, if the house + office is 500k+, would splitting the purchase on paper (e.g. exchanging on consecutive days on separate contracts) be acceptable to stay within the limit, or would that be unacceptable to HMRC or the mortgage provider? In this case, the house would be bought first and then the office, but I think no additional 3% stamp duty would be due on the office as it is not residential (at the time of purchasing).

canaldumidi

Are the house and office on the same Title, or 2 separate titles? If it's a single purchase of a single title, I don't see an issue with SDLT.

Turning it into an annexe could present difficulties with either the mortgage lender and/or Planners, if it is self-contained. It might require planning consent and probably would be rated separately for Council Tax.

Lenders are wary of self-contained annexes because of the possibilty that you might rent it out.

TripleH

The question is also the annexe's current position with regards to rates and if it is included as part of the house or subject to business rates?

SDLT_Geek

cryvate said:

I am looking into buying a house. I am also considering buying the (small) office owned by the same owner.

For the time being, I would be happy to have it as an office (I work remotely) but medium term I would like to turn it into an annex (it already has plumbing) and maybe add a kitchen (I am an immigrant and would love to have my family over for extended stays with their families!).

For context:
- the office is ~30 m2 and the house is ~90 m2.
- the office has only been an office since ~2008 and was used a storage before then
- the office, the property we are buying and a bunch of other stuff are on one title (I am requesting the title plan, I already have the title register)

I have a few questions:
- Would I be able to get a normal residential mortgage for the house + office? My mortgage broker seems to think so because at least 60% of the property is the main residence.
- Would planning permission be difficult? It is in a conservancy area, but it would require no external work. I guess building regs could be a problem? Is it different because I want it as an annex instead of a dwelling? Can I apply for planning before buying the property? I think this was done when the use of the property was changed for it becoming an office originally (though that was leased/rented, not sold).
- In regards to SDLT, my understanding is that if we buy the properties together, we would pay SDLT twice on the average, however, how does this work with FTB status? I guess I would pay commercial SDLT on the office?
- In regards to LISA, if the house + office is 500k+, would splitting the purchase on paper (e.g. exchanging on consecutive days on separate contracts) be acceptable to stay within the limit, or would that be unacceptable to HMRC or the mortgage provider? In this case, the house would be bought first and then the office, but I think no additional 3% stamp duty would be due on the office as it is not residential (at the time of purchasing).

I can help a bit on the SDLT position.  It would be important to establish whether the office has its own independent commercial use (for example rented out) rather than being an outbuilding of the house.  The definition of residential property includes buildings on the garden or grounds of the main dwelling.  It would be relevant if, as you suggest, the permitted use of the office building is for commercial, not residential purposes.

If the office building counts as non-residential then SDLT is assessed on the total purchase price on the "mixed" rates of SDLT (the same as the non-residential rates).  The top rate is 5%.  FTB status makes no difference.

If the office building is an outbuilding on the garden or grounds of the dwelling then the SDLT is assessed on the basis of a single dwelling being bought.

cryvate

Thanks for the comments so far! I think I "buried the lede" by not adding more detail.

The office was previously leased separately but is currently vacant. The house and office are on the same title, and this title also covers the other side of the semi-detached and definitely more land.

The office is reachable from and has a door to the front garden of the house (it effectively forms the front garden "fence") though this was unused when it was rented out insofar as I can tell.

Just to make things more complicated, the house, as currently rented, actually has access to a "shed" that is part of the office the door to the office is boarded off. Not sure whether that would complicate matters (if I bought the house separately, I am not sure it would be included). It seems either the office or the shed came first and then the other one was bolted on (or rebuilt) as the construction is different.

user1977

canaldumidi said:

Are the house and office on the same Title, or 2 separate titles? If it's a single purchase of a single title, I don't see an issue with SDLT.

I can't see why how it's registered would be relevant to SDLT. Pretty commonplace for, say, a single house to be registered over more than one title - it's one property for SDLT purposes. Or a block of flats on one title is going to be eight (or whatever) properties for SDLT purposes.

SDLT_Geek

cryvate said:

Thanks for the comments so far! I think I "buried the lede" by not adding more detail.

The office was previously leased separately but is currently vacant. The house and office are on the same title, and this title also covers the other side of the semi-detached and definitely more land.

The office is reachable from and has a door to the front garden of the house (it effectively forms the front garden "fence") though this was unused when it was rented out insofar as I can tell.

Just to make things more complicated, the house, as currently rented, actually has access to a "shed" that is part of the office the door to the office is boarded off. Not sure whether that would complicate matters (if I bought the house separately, I am not sure it would be included). It seems either the office or the shed came first and then the other one was bolted on (or rebuilt) as the construction is different.

Do I read this correctly that the house is currently rented out, but the tenancy does not include the office, which was previously leased for business use but is now vacant?

Are you expecting to buy the house with vacant possession or subject to the tenancy?

I agree with user1977 that, so long as you have the one seller, it does not matter how many registered titles there are.

Slithery

SDLT_Geek said:

Do I read this correctly that the house is currently rented out, but the tenancy does not include the office, which was previously leased for business use but is now vacant?

Are you expecting to buy the house with vacant possession or subject to the tenancy?

According to the OP's other posts on the same subject they are the current tenant.

LISA + mortgage buying 2 properties

Valuation while renting quant property from public body

SDLT_Geek

Slithery said:

SDLT_Geek said:

Do I read this correctly that the house is currently rented out, but the tenancy does not include the office, which was previously leased for business use but is now vacant?

Are you expecting to buy the house with vacant possession or subject to the tenancy?

According to the OP's other posts on the same subject they are the current tenant.

LISA + mortgage buying 2 properties

Valuation while renting quant property from public body

Well spotted.  So OP rents a semidetached cottage next to a lockkeepers cottage, with an office adjoining, in a rural area, all owned by a public authority.

Rough values given are £425,000 for the cottage and £100,000 for the office.

gwynlas

Most houses have some kind of outbuildings whether this is a detached garage shed or former coach house stables etc and their use is classed as belongng to the household, if this office is currently vacant and on the same title then there should not be any issue. I would be surprised if change ot use was applied for you need to check. How you use it is up to you whether office workshop or home gym. If  it is structurally sound you could put a bed or sofa bed in there for relatives use. Creating an annex would involve building control to check insulation, sanitation ventilation etc. Whilst a toilet and shower and hot drinks area would be acceptable for an office full cooking facilities might mean it could be lettable as an independent building
If you are borrowing on a standard mortgage then no additional stamp duty should be payable.

SDLT_Geek

SDLT for buying a dwelling only for £425,000 with first time buyers' relief would be £6,250.

SDLT for buying a dwelling with an office (not on the garden or grounds) for £525,000 would be £15,750.