Deconversion of two flats back to single dwelling.

Shaun98

Looking for some advice,

Had an offer accepted on a property which is currently two flats but was originally a three bedroom house.

We intend to deconvert the property back to a three bedroom house for the purpose of our main residence.

We need a mortgage on this property but have hit a few hurdles which are stopping the process.

The land the property was built on is freehold, this freehold covers three properties on the one plot.

The two flats are then leaseholds of the freehold with 850years+ left on the lease. 

The problems are the freehold and leaseholds are owned by different people & the bank will only lend on one tittle, also we can’t get two mortgages for the individual flats and convert them back to the three bedroom house as this invalidates the terms in the mortgage contract.

Does anyone have any ideas or recommendations which could help us potentially secure this deal? 

Thank you

user1977

You'll need development finance of some sort to buy, until you've finished putting it back into one house and can then remortgage to a normal residential mortgage.

eddddy

Shaun98 said:

Had an offer accepted on a property which is currently two flats but was originally a three bedroom house.

...

The land the property was built on is freehold, this freehold covers three properties on the one plot.

The two flats are then leaseholds of the freehold with 850years+ left on the lease. 

People often misunderstand what a freehold property is, are you absolutely sure that you've understood this correctly : "The land the property was built on is freehold" 

It's much more usual for the land and the building to be freehold, and the flats within the building to be leasehold.


So what exactly is your offer for?

For example, is it for:

• 2 vacant leasehold flats
• 2 vacant leasehold flats plus the freehold building they are in (i.e. The existing freehold title will be split)
• 2 vacant leasehold flats plus the freehold of 3 buildings (i.e. The whole of the existing freehold title)

Or something else?





Edit to add....

Or is there a headlease (or intermediate lease) involved - i.e. a lease for the whole building? With sub-leases for each flat?

That might allow the land to be freehold - but not the building.

hannahcolobus

Houses like this are virtually impossible to buy unless you get something like development finance as mentioned above. I looked in to a bridging loan to do this before but the interest costs made the purchase financially unviable. 

I looked at another one recently (and asked about it on here) but it just wasn’t feasible. I’m surprised you’ve got this far in the process without someone noticing. 

If it was me and I was desperate to get the house I’d look at a loan and then negotiate a reduction based on interest costs- but there’s a good chance they’d reject and just wait for a cash buyer. 

Surrey_EA

Just to highlight a further potential complication. I've dealt with a couple of scenarios like this recently, and in both cases the local authority refused planning consent to convert from 2 flats to 1 single residence, as they saw this as a net loss of the number of housing units in the borough, when they were under pressure from central government to increase the number.

Worth checking whether this is likely to be an issue in your specific area, if you have not already done so.

SadieO

Sounds complicated - have you looked into how you'll deal with having two of everything - front doors, kitchens etc and how much it'll cost to convert? What about council tax, utilities etc, are the flats registered separately for supply and bills? Are they being sold as one property or two? If it's two, will you have to pay "second home" stamp duty on whichever sale is processed second? 

Is there are particular reason you are doing this rather than just buying a house? There are some amazing Victorian townhouses where I live that have been split into flats and I'm sure it would be lovely to return them to single homes. But a lot of faff and it would probably be easier and cheaper to just buy one existing home! Plus if you want to sell it in the future, would you be able to recoup your money? One house might end up worth less than the two original flats. 

ComicGeek

And also for added complication, converting 2 dwellings into 1 would also trigger building regs, so could require significant upgrades to existing insulation, new windows, new heating systems etc