Selling a property with a shop below

crikaus

My dad owns a property, with a shop run by current occupier on the ground floor,  living accommodation above and behind the shop which they use

Dad had owned for many years but due to age he is looking to sell it

The shop is run by relative who also lives in the house, there was a lease but it ran out 15 years ago

the current occupant is I assume very happy with status quo and is also paying rent in time, though rent no increased in 20 years 

Dad's put me in charge to sell it how do i go about it I'm not clued up

Is the first instance to contact estate agent and ask for price as both a freehold and leasehold, can it even sold as a freehold if there is a shop below?

does it need a lease and what if the current occupant becomes hostile to signing a new lease

user1977

I take it you mean selling the whole property, with the tenant in situ? Assuming your dad owns the freehold then that's what he'd be selling. It's a commercial investment property, it will be easier if the lease is formalised.

crikaus

user1977 said:

I take it you mean selling the whole property, with the tenant in situ? Assuming your dad owns the freehold then that's what he'd be selling. It's a commercial investment property, it will be easier if the lease is formalised.

dad owns the whole property, though I don't understand who owns the shop as dad owns the property but surely the shop contents are owned but the current relative

Dad wants out completely, can it be sold with a new lease, though the new rent will be a shock for the shop owner, would they need to be evicted if they refuse to sign the lease 

Bookworm225

since this appears to be a case of the disinterested leading the blind, it would be better if "you" sought proper advice from a commercial property specialist real estate agency 

why is occupying relative not able/willing to buy the property themselves?

Herzlos

First thing to do is ask the tenant if they'd be interested in buying the flat and the shop. If they've been renting them for 20 years they may be happy to do so. 

After that, you'd just need to agree a price and set the solicitors to work. 

crikaus

Herzlos said:

First thing to do is ask the tenant if they'd be interested in buying the flat and the shop. If they've been renting them for 20 years they may be happy to do so. 

After that, you'd just need to agree a price and set the solicitors to work. 

I doubt current incumbent will buy esp as they claim the business is not doing well and in fairness they have so I hear made a mess of the property so it will be a external sale, but if course I will ask them

I'll contact a couple of estate agents and take it from there, hopefully get a new lease for the shop in place and try to sell the whole property on that basis

gwynlas

You  need to also look at what is happening with surrounding properties, are they doing well?

Dependent on position the property might be suitable for wholly residential occupation eitther by incorporating the shop into the house or conversion into two or more flats either way it would necessitte a change of use.

Are the current tenants approaching retirement age?

Tucosalamanca

So you have an occupied shop where no recent lease exists and is currently being rented below market rate?

If I'm reading it correctly, there is also living accommodation that is currently occupied, again with no recent lease or agreement in place?

Do you know if the two premises are one or two entities, with one lease covering both (or not).
Can the flat be accessed through the shop, or are each completely separate?

As it stands, the property has a very low value, it's a messy situation that few investors would be interested in.

I'd say that you have two options.

Either try and remove tenants from both properties and sell as vacant (you could use carrot or stick approach to achieve this).

Or regularise the situation, establish lease and rent agreements for both properties. If the tenants aren't willing parties, this won't be straightforward.

I would say that you're likely months/years away from selling the property unless the tenants are 100% cooperative.

If you're not 'clued up', you have a steep learning curve ahead.

For the fastest and best outcome, you'll want to employ a specialist lawyer. A high street solicitor is unlikely to have an expert inhouse and this could lead to sub-optimal actions and a protracted process.

You might find an agent with knowledge and experience of situations like this, but one way or another, it's not a straightforward process.

Herzlos

crikaus said:

Herzlos said:

First thing to do is ask the tenant if they'd be interested in buying the flat and the shop. If they've been renting them for 20 years they may be happy to do so. 

After that, you'd just need to agree a price and set the solicitors to work. 

I doubt current incumbent will buy esp as they claim the business is not doing well and in fairness they have so I hear made a mess of the property so it will be a external sale, but if course I will ask them

I'll contact a couple of estate agents and take it from there, hopefully get a new lease for the shop in place and try to sell the whole property on that basis

You'll also need to factor in the work and hassle. If it takes a year to get old tenant out and the property is in a poor state, you might still be better off giving them a much lower than market price to get it concluded, get some money for it, and get rid of any liability. 

If they've been renting for 20 years, albeit at a non-adjusted rate, they've presumably already paid at least the market value of it already. 

user1977

Without the current tenant, I would guess not that many retailers these days are interested in a flat upstairs being bundled in to a lease of the shop, so some sort of conversion may make it more marketable.