Advice on officially splitting house into 2 to enable selling of one.

djewson

Good evening,

please bear with me on the following as this is quite a long post and a little complex...

We originally bought my parents house in 2010 as they initially took out an equity release on it, which after reflection and a couple of years, none of us liked the sound of where it would leave things in the future.
Basically they could continue to live in the property until they both pass away, the property equity would reduce over that time due to accruing interest until that day, meaning there would possibly be very little left at the end to pass on to the family.
(namely myself (their son) and my son (their grandson eventually))

We basically bought the house at the cost of settling the equity release that was on the property which was £60k.
The value of the house at that time was deemed to be around £130k
WE managed to obtain a mortgage for the property, albeit was quite difficult due to the situation of both my grandmother and my parents continuing to live there.
Though my parents did have to sign away any rights to live in the property should we choose to sell and possibly kick them out etc.

At that time, my Grandmother was also living in the main part of the house (as it was also originally her house, gifting it down to my Mum a few years prior) and my parents were living in an extension that they built on the side of the property so they could be close to my Gran for support and care.
Both would continue to live in their respective parts of the house after we purchased.

The extension where my parents reside, was planned and completed prior to us buying the property.
It consists of 1 living room / kitchen, 1 bedroom and 1 shower / toilet room.

The original plan had a doorway from the extension to the main property, but they were told by the building inspector that this only needed to really be there if the property was ever sold later on, so they chose not to fit a door and only have an external entrance for the extension.

The property has always been classed as one property - being main house and the extension built on the side.
This has always been 1 address with 1 council tax bill too.

Fast forward to 2021 - 
My Grandmother has now been taken into care so the main residence is now empty.

Within half an hour of that happening, my parents received a phone call to say that as they had now become responsible for the 'New Build' they would now have their own Council Tax and it would also be back dated 12 months too !!

Not a great start to what has been another terrible year for everyone - they actually received a Council tax bill for almost £2400 (1200 for each year - last and next)

When the council were questioned about what new build they were talking about they said the building on the side as it is classed as a seperate dwelling, due to having no adjoining doorway to the main residence. (remember they were told it didn't matter unless the house was sold).

They have also now been given a new address for their 'Extension' - being the same as the main property but with an 'A' after the numbers.

Nothing existed on any online registers for this new address, for any purpose, not even for the council tax payment.
When this did appear, it indeed was backdated to the year before (very sneaky and out of order in my eyes)

All of this has also been done without any communication to either me or my wife (we jointly own the property), which was also out of order that changes were being made to our property without our knowledge or say so !!

We have since spoken to our solicitor for a quick free half hour, who after checking the planning and deeds etc, confirmed that the Build is an Extension and not a separate dwelling so should definitely not have been given a new address..

We have just spoken to the council with regard to this total mess as we are now in a position that we are looking to potentially rent out the main residence as it is now empty and we have spent the last year renovating and modernising it, as my Gran hadn't really touched it for 40 years.
We assumed that the Council Tax would need to be done for renting out anyway so they both have a separate bill etc. but surely that should have been our choice when etc not theirs !

The council are now saying that due to not having the through doorway that this has now instigated the separate dwelling tag.

Now we are curious that if the 'Self Contained' Extension IS a separate dwelling in their eyes and it has its own address now too, even though we have a completion Certificate stating it is an extension.
Where would we stand on officially splitting the properties on the land registry and selling the main property and keeping the 'Extension' or separate dwelling as the council are now calling it for my parents.

The extension has its own Electricity supply anyway as I said above we were possibly looking to rent the main house out.
The water still needs to be separated and that was going to be our next job.
So it would be totally separate including utilities as well.
This was going to be our last job, so that each part has a bill for all utilities.

I asked the council now that they have made it into a separate dwelling i.e number 123A how does this affect our
DEEDS
MORTGAGE
Where does it actually say who owns the new address property as we have no paperwork for it and it is now effectively a dwelling built on our land that we do have paperwork for.
Does the Separate Dwelling actually meet planning requirements for a separate dwelling etc.

they have not given any answers to those questions at all, basically saying its not their issue.

This all seems to be some sort of money grab due since my Gran has gone into full time care and the council are having to fund her care
7 year rule doesn't apply for it anyway.

any advice is welcomed until we can actually get to speak to our solicitor face to face again, bloody pandemic causing phone call meetings only.
Which is quite difficult and would be far easier in a face to face situation we feel.

thanks for taking the time to read and if you do have advice, thank you again.

theoretica

Same thing happened to my parents' property.  If the extension is demonstrably being used as an extension - same household in both, people going back and forth - then you might be able to stick to one council tax.  But when it is two households the council will charge two lots of council tax.  It might be worth investigating whether having the extension as a separate property attached devalues the main property enough to put it down a council tax band.

djewson

theoretica said:

Same thing happened to my parents' property.  If the extension is demonstrably being used as an extension - same household in both, people going back and forth - then you might be able to stick to one council tax.  But when it is two households the council will charge two lots of council tax.  It might be worth investigating whether having the extension as a separate property attached devalues the main property enough to put it down a council tax band.

We thought about this aspect too
The main building has always been Band B
It didnt change when the extension was built and stayed at 'B' even after we bought the property, which is usully the time that a banding change happens.

Now it has been split into B for main and A for extension
done by the Valuation office

We were always curious about the main house anyway, as the entire row of the terrace it is on, is 'B' but the all the rest are 3 bedrooms terrace houses and my Grans is only 2 bed, we assumed it was the old drive by working out and they put them all in the same band back in the day.

We recently sold our 2 bed semi which is only  a mile away from this one last year and that was only a band 'A'

Definitely something to look into going forward, but we've bigger things to sort at the moment.

Due to the fact that my Gran is in care at the moment, the main house is actually CT exempt with her being in care.
Which has been a help as we've been renovating etc.

The council confirmed this this week.
So the other CT on the extension isnt a massive issue as we aren't paying anything on the empty main and my parents are paying 'A' on their part only, so fair is fair.

The big bug bear was the 12 month backdate for theirs and the way the council went about it...
I assume it was instigated due to the CT exemption on the main property, which as mum and dad were still living at the same address made it pop up somewhere or something.

elsien

It has no door to the main house. It’s completely self contained with its own kitchen and bathroom. It has separate utilities apart from the water supply. I can see where the council tax dept are coming from.

Building control and council tax are two different entities under different legislation.  What one says doesn’t necessarily impact on the views of the other in their separate domains. Seems to me that’s how the confusion has arisen. 

user1977

If you own the land then you own the house on it.

But being classed as a separate dwelling for council tax purposes doesn't necessarily mean it can be occupied independently of the house for planning purposes - so I wouldn't assume you can sell it without getting planning permission first.

djewson

elsien said:

It has no door to the main house. It’s completely self contained with its own kitchen and bathroom. It has separate utilities apart from the water supply. I can see where the council tax dept are coming from.

Building control and council tax are two different entities under different legislation.  What one says doesn’t necessarily impact on the views of the other in their separate domains. Seems to me that’s how the confusion has arisen. 

Absolutely agree, it just seemed weird that it has been 1 bill for 11+ years, but the same afternoon my gran was moved into a care home it all happened.
The only reason the door was left out was to give both my gran and my parents some sort of privacy from each other, even though both spent time in each others company when needed.
I do agree that going forward the council tax would have needed to be split anyway.
It is the fact that it was backdated a year.
A £2500 CT bill for two 70+ year old pensioners isnt great and caused much stress.
They panicked and literally took money out of their savings to pay the previous years CT as they were being threatened with legal action if they didnt pay, they couldnt afford to pay nearly £250 per month for one bill.
That would have crippled them.
They used to pay the one single CT bill anyway for everyone.

djewson

user1977 said:

If you own the land then you own the house on it.

At least thats good to know, we had originally planned to move into the house ourselves at some point, but thankfully my gran has lived to the ripe old age of 98 before needing any care, so we have bought our own property now anyway now, hence the rental idea now.
Were just curious around the splitting possibility.
We recently said (before all this happened) we wondered if it could have its own address and be officially split up etc.
but it was more of a curiosity thing, but now it already has its own address and its own CT and utilities.
It feels like it may be a little closer to being able to be done, but we just dont know until we seek legal assistance, which obviously will come at a cost.
This is more of a 'has anyone come across this before' prior to us throwing a potentially substantial sum of money at it.

theoretica

djewson said:

theoretica said:

Same thing happened to my parents' property.  If the extension is demonstrably being used as an extension - same household in both, people going back and forth - then you might be able to stick to one council tax.  But when it is two households the council will charge two lots of council tax.  It might be worth investigating whether having the extension as a separate property attached devalues the main property enough to put it down a council tax band.

We thought about this aspect too
The main building has always been Band B
It didnt change when the extension was built and stayed at 'B' even after we bought the property, which is usully the time that a banding change happens.

Now it has been split into B for main and A for extension
done by the Valuation office

We were always curious about the main house anyway, as the entire row of the terrace it is on, is 'B' but the all the rest are 3 bedrooms terrace houses and my Grans is only 2 bed, we assumed it was the old drive by working out and they put them all in the same band back in the day.

We recently sold our 2 bed semi which is only  a mile away from this one last year and that was only a band 'A'

Definitely something to look into going forward, but we've bigger things to sort at the moment.

Due to the fact that my Gran is in care at the moment, the main house is actually CT exempt with her being in care.
Which has been a help as we've been renovating etc.

The council confirmed this this week.
So the other CT on the extension isnt a massive issue as we aren't paying anything on the empty main and my parents are paying 'A' on their part only, so fair is fair.

The big bug bear was the 12 month backdate for theirs and the way the council went about it...
I assume it was instigated due to the CT exemption on the main property, which as mum and dad were still living at the same address made it pop up somewhere or something.

Don't leave it too long - I think you only have a limited time to appeal. 

If your parents are over 65 then they should apply for a 'granny annex' exemption to the council tax - especially the backdated bit.

Chandler85

djewson said:

elsien said:

It has no door to the main house. It’s completely self contained with its own kitchen and bathroom. It has separate utilities apart from the water supply. I can see where the council tax dept are coming from.

Building control and council tax are two different entities under different legislation.  What one says doesn’t necessarily impact on the views of the other in their separate domains. Seems to me that’s how the confusion has arisen. 

Absolutely agree, it just seemed weird that it has been 1 bill for 11+ years, but the same afternoon my gran was moved into a care home it all happened.
The only reason the door was left out was to give both my gran and my parents some sort of privacy from each other, even though both spent time in each others company when needed.
I do agree that going forward the council tax would have needed to be split anyway.
It is the fact that it was backdated a year.
A £2500 CT bill for two 70+ year old pensioners isnt great and caused much stress.
They panicked and literally took money out of their savings to pay the previous years CT as they were being threatened with legal action if they didnt pay, they couldnt afford to pay nearly £250 per month for one bill.
That would have crippled them.
They used to pay the one single CT bill anyway for everyone.

They should really have been paying council tax for the extension for all 11 of those years since it would appear to be a separate dwelling.  You are even looking to either sell the main house or rent it out as a separate house, which reinforces that it is really a separate dwelling.

The council will have reviewed who was living where when your gran mother went into care so they can see who if anyone they should be charging, what assets they had and it will have come up then, so the timing isn't that unexpected.

As above you can appeal that it is a "granny annex" and exempt, but from your description it sounds like more then that.

CIS

djewson said:

Good evening,

please bear with me on the following as this is quite a long post and a little complex...

We originally bought my parents house in 2010 as they initially took out an equity release on it, which after reflection and a couple of years, none of us liked the sound of where it would leave things in the future.
Basically they could continue to live in the property until they both pass away, the property equity would reduce over that time due to accruing interest until that day, meaning there would possibly be very little left at the end to pass on to the family.
(namely myself (their son) and my son (their grandson eventually))

We basically bought the house at the cost of settling the equity release that was on the property which was £60k.
The value of the house at that time was deemed to be around £130k
WE managed to obtain a mortgage for the property, albeit was quite difficult due to the situation of both my grandmother and my parents continuing to live there.
Though my parents did have to sign away any rights to live in the property should we choose to sell and possibly kick them out etc.

At that time, my Grandmother was also living in the main part of the house (as it was also originally her house, gifting it down to my Mum a few years prior) and my parents were living in an extension that they built on the side of the property so they could be close to my Gran for support and care.
Both would continue to live in their respective parts of the house after we purchased.

The extension where my parents reside, was planned and completed prior to us buying the property.
It consists of 1 living room / kitchen, 1 bedroom and 1 shower / toilet room.

The original plan had a doorway from the extension to the main property, but they were told by the building inspector that this only needed to really be there if the property was ever sold later on, so they chose not to fit a door and only have an external entrance for the extension.

The property has always been classed as one property - being main house and the extension built on the side.
This has always been 1 address with 1 council tax bill too.

Fast forward to 2021 - 
My Grandmother has now been taken into care so the main residence is now empty.

Within half an hour of that happening, my parents received a phone call to say that as they had now become responsible for the 'New Build' they would now have their own Council Tax and it would also be back dated 12 months too !!

Not a great start to what has been another terrible year for everyone - they actually received a Council tax bill for almost £2400 (1200 for each year - last and next)

When the council were questioned about what new build they were talking about they said the building on the side as it is classed as a seperate dwelling, due to having no adjoining doorway to the main residence. (remember they were told it didn't matter unless the house was sold).

They have also now been given a new address for their 'Extension' - being the same as the main property but with an 'A' after the numbers.

Nothing existed on any online registers for this new address, for any purpose, not even for the council tax payment.
When this did appear, it indeed was backdated to the year before (very sneaky and out of order in my eyes)

All of this has also been done without any communication to either me or my wife (we jointly own the property), which was also out of order that changes were being made to our property without our knowledge or say so !!

We have since spoken to our solicitor for a quick free half hour, who after checking the planning and deeds etc, confirmed that the Build is an Extension and not a separate dwelling so should definitely not have been given a new address..

We have just spoken to the council with regard to this total mess as we are now in a position that we are looking to potentially rent out the main residence as it is now empty and we have spent the last year renovating and modernising it, as my Gran hadn't really touched it for 40 years.
We assumed that the Council Tax would need to be done for renting out anyway so they both have a separate bill etc. but surely that should have been our choice when etc not theirs !

The council are now saying that due to not having the through doorway that this has now instigated the separate dwelling tag.

Now we are curious that if the 'Self Contained' Extension IS a separate dwelling in their eyes and it has its own address now too, even though we have a completion Certificate stating it is an extension.
Where would we stand on officially splitting the properties on the land registry and selling the main property and keeping the 'Extension' or separate dwelling as the council are now calling it for my parents.

The extension has its own Electricity supply anyway as I said above we were possibly looking to rent the main house out.
The water still needs to be separated and that was going to be our next job.
So it would be totally separate including utilities as well.
This was going to be our last job, so that each part has a bill for all utilities.

I asked the council now that they have made it into a separate dwelling i.e number 123A how does this affect our
DEEDS
MORTGAGE
Where does it actually say who owns the new address property as we have no paperwork for it and it is now effectively a dwelling built on our land that we do have paperwork for.
Does the Separate Dwelling actually meet planning requirements for a separate dwelling etc.

they have not given any answers to those questions at all, basically saying its not their issue.

This all seems to be some sort of money grab due since my Gran has gone into full time care and the council are having to fund her care
7 year rule doesn't apply for it anyway.

any advice is welcomed until we can actually get to speak to our solicitor face to face again, bloody pandemic causing phone call meetings only.
Which is quite difficult and would be far easier in a face to face situation we feel.

thanks for taking the time to read and if you do have advice, thank you again.

With all due respect, your solicitor doesn't really understand council tax legislation. As someone who specifically in dealing with council tax issues, it's very common to see people try and dabble with it, without appreciating that it's a whole multitude of tax legislation in its own right. Simply calling something an 'extension' doesn't bypass council tax legislation.

The 'extension' is clearly either a s3 dwelling or an article 3 dwelling (self-contained unit). The valuation office agency would make the decision as to which it falls under. On an appeal, there's no way from what you've described that you would get its own banding removed as the property presently stands.

In basic terms, they both lead to a council tax band being issued, but the specific method of banding will determine if any additional discounts or reductions can apply to the 'extension'. The reason banding can be backdated is to prevent it being avoided in situations like this where records need to be corrected to ensure the tax records are correct.

How it is termed for council tax purposes is entirely different to how it may be termed for other purposes - the council tax definition extends no further than the calculation of council tax. Other legislation, and other bodies, can come up with different determinations for their own purposes.

theoretica

On selling one of the two properties separately - I think that might need planning permission as a 'change of use' especially if the initial planning permission was definitely for an extension not a separate dwelling.