Deconversion of a property, currently flats, into one house - Planning, Stamp Duty, Land Registry

rustysheriff

Hi everyone sorry for the long post - hoping for some advice please.

We are in the early stages of buying an old property that was converted from a house into 2 flats in the mid 70's. The property, we are told, is on one title and just has the Freehold with no leaseholds on the flats. It has been rented out by the same family for the last 50 years and the flats have never been sold separately but have separate Council Tax and Services.

We LOVE the house and would like to buy it and deconvert it back to a single dwelling for our family home and give it the love it so badly needs after many years of neglect (still livable but needs everything doing).

The deconversion itself could be as simple as taking down 2 doorways at the bottom of the stairs and perhaps a stud wall that goes up the stairs - and coneccting up the services to single inlets/meters etc but there may well be much more to it than that - I'm not sure.

We have started to look at the way forward and have quickly realised that we would not be able to port our current residential mortgage across, and so have found some other posible ways to fund the purchase until it is deconverted and then we can return to our ported residenial mortgage (if deconverted within 180 days).

Planning permission is a big one - we may not need it at all but if we do and the council will not grant it we can't go ahead and it's dead in the water - we are in south east England but not close to London. I have contacted the local council and they want £200 to answer that question as they deem it as pre planning application advice.

The other potential issue could be Stamp Duty- if we are deemed to be buying 2 flats will it be seen as buying a second home? Or does the fact that it is on a single title with just the freehold make it just one property?

Also does the Land registry come into it? I know they take a long time to updated their records, would this be a potential stumbling block down the line?

We are struggling to find information on all of this so if any one has any first hand experience or knowledge on the subject it would be gratefully received.

Many thanks in advance

DE_612183

single title - one property

land registry will have to update their records - but your conveyancing solicitor will do this for you.

user1977

DE_612183 said:

single title - one property

No, one transaction but two dwellings (if you're talking from an SDLT point of view).

rustysheriff

user1977 said:

DE_612183 said:

single title - one property

No, one transaction but two dwellings (if you're talking from an SDLT point of view).

Do you think we would pay Stamp Duty on each flat, even if we are buying the building as one? Struggling to find any examples. 

silvercar

rustysheriff said:

user1977 said:

DE_612183 said:

single title - one property

No, one transaction but two dwellings (if you're talking from an SDLT point of view).

Do you think we would pay Stamp Duty on each flat, even if we are buying the building as one? Struggling to find any examples. 

There may be a possibility of claiming any excess SDLT back if you deconvert within 3 years.

@SDLT_Geek is the expert.

daveyjp

Stamp duty is calculated on the total selling price of the property (ies), whether this be one unit or a whole block of flats.

allconnected

What counts for the purposes of Stamp Duty Land Tax (SDLT) is how many residential properties you own at the end of the day of purchase. If you buy two flats simultaneously, then this will be two properties (at least, depending if you own any other property) and so the higher rate for additional dwellings (an extra 3%) will apply to the whole of the purchase price.

Multiple Dwellings relief, which might have reduced your SDLT bill, was abolished in 2024 so won’t help. When you see people referring to claiming tax back after combining the flats, this is what they are referring to, but it’s no longer relevant.

The slightly complicated bit is if you’re effectively purchasing both flats as a replacement for  your current residential property - I don’t think the current rules around the ‘main property replacement’ get-out from the additional 3% allow you to apply this to the purchase of both of what is currently 2 separate properties. You’d need to take advice on that. To get you started there’s a tribunal case here from 2020 which is similar (two adjacent flats bought with the intention of combining into a single property)

https://www.bailii.org/uk/cases/UKFTT/TC/2020/TC07873.html

However, the single title certainly doesn’t get around the ‘additional properties’ surcharge - SDLT looks at how many residential properties you buy, not what title they are on. 

SDLT_Geek

rustysheriff said:

Hi everyone sorry for the long post - hoping for some advice please.

We are in the early stages of buying an old property that was converted from a house into 2 flats in the mid 70's. The property, we are told, is on one title and just has the Freehold with no leaseholds on the flats. It has been rented out by the same family for the last 50 years and the flats have never been sold separately but have separate Council Tax and Services.

We LOVE the house and would like to buy it and deconvert it back to a single dwelling for our family home and give it the love it so badly needs after many years of neglect (still livable but needs everything doing).

The deconversion itself could be as simple as taking down 2 doorways at the bottom of the stairs and perhaps a stud wall that goes up the stairs - and coneccting up the services to single inlets/meters etc but there may well be much more to it than that - I'm not sure.

We have started to look at the way forward and have quickly realised that we would not be able to port our current residential mortgage across, and so have found some other posible ways to fund the purchase until it is deconverted and then we can return to our ported residenial mortgage (if deconverted within 180 days).

Planning permission is a big one - we may not need it at all but if we do and the council will not grant it we can't go ahead and it's dead in the water - we are in south east England but not close to London. I have contacted the local council and they want £200 to answer that question as they deem it as pre planning application advice.

The other potential issue could be Stamp Duty- if we are deemed to be buying 2 flats will it be seen as buying a second home? Or does the fact that it is on a single title with just the freehold make it just one property?

Also does the Land registry come into it? I know they take a long time to updated their records, would this be a potential stumbling block down the line?

We are struggling to find information on all of this so if any one has any first hand experience or knowledge on the subject it would be gratefully received.

Many thanks in advance

As others have said, stamp duty land tax looks at the number of "dwellings" you are buying (and any others you own).  Here you are buying two, so we would expect the extra 5% SDLT to apply to the price you pay.

It seems unlikely that the "subsidiary dwellings" rule will help you, unless one of the flats is worth at least 2/3 of the total value.  https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09755

I agree with @allconnected that the "replacement" rules are unlikely to help (see the Moaref decision).

The analysis could be different if by the time of completion the seller has started work to convert the house back to a single dwelling so that when you buy it it is the process of conversion to a single dwelling.  That is likely to be impractical.

rustysheriff

As others have said, stamp duty land tax looks at the number of "dwellings" you are buying (and any others you own).  Here you are buying two, so we would expect the extra 5% SDLT to apply to the price you pay.

Hi, thanks for the advice, seems to make sense but just to check, I would only pay the 5% SDLT on on of the flats? As one of the flats will count as a second home = presumably the cheapest if I can choose? Not on the purchase of the whole house?

Also, I might raise the possibility of the current owners starting the deconversion before purchase, how far along do you think it would need to be as the deconversion itself might be quite simple, possibly removing a couple of internal doors and a stud wall? 

Brie

rustysheriff said:

Also, I might raise the possibility of the current owners starting the deconversion before purchase, how far along do you think it would need to be as the deconversion itself might be quite simple, possibly removing a couple of internal doors and a stud wall? 

I seem to remember someone saying something about it being 2 properties if it had 2 kitchens.  So it might be a case of getting rid of one (changing the use to a bathroom perhaps?)

SDLT_Geek

rustysheriff said:

As others have said, stamp duty land tax looks at the number of "dwellings" you are buying (and any others you own).  Here you are buying two, so we would expect the extra 5% SDLT to apply to the price you pay.

Hi, thanks for the advice, seems to make sense but just to check, I would only pay the 5% SDLT on on of the flats? As one of the flats will count as a second home = presumably the cheapest if I can choose? Not on the purchase of the whole house?

The extra 5% SDLT, if it applies, would apply to the whole price.