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  • FIRST POST
    • tonyminides
    • By tonyminides 20th Apr 18, 9:40 AM
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    tonyminides
    Splitting Land/Deeds
    • #1
    • 20th Apr 18, 9:40 AM
    Splitting Land/Deeds 20th Apr 18 at 9:40 AM
    I am about to buy a house that has spare land. My intention is to build another dwelling and I already have a positive pre-app decision in principle from the council. The lender has given a decision in princimple but has not seen the plot yet.

    Do I tell the lender now of my plans and ask them to agree that I split the title/land on completion or do I hold back, build the new house then split the deeds when I sell one or of the properties?
    Last edited by tonyminides; 20-04-2018 at 9:47 AM.
Page 1
    • davidmcn
    • By davidmcn 20th Apr 18, 9:46 AM
    • 7,672 Posts
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    davidmcn
    • #2
    • 20th Apr 18, 9:46 AM
    • #2
    • 20th Apr 18, 9:46 AM
    You will need consent from the lender before carrying out any development, so if you're planning to do it straight away best to clear it with them first. They will of course need to value the remaining site rather than the whole of the current property.
    • tonyminides
    • By tonyminides 20th Apr 18, 9:52 AM
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    tonyminides
    • #3
    • 20th Apr 18, 9:52 AM
    • #3
    • 20th Apr 18, 9:52 AM
    I assume the lender would want to ensure there is enough security remaining after the split of course. Their options to reduce risk would be to 1) reduce the amount borrowed 2) take a share in the new-build 3) lend to build then insist on repayment after a sale?
    • davidmcn
    • By davidmcn 20th Apr 18, 9:58 AM
    • 7,672 Posts
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    davidmcn
    • #4
    • 20th Apr 18, 9:58 AM
    • #4
    • 20th Apr 18, 9:58 AM
    If you want funding for the development then you'll need to look at more specialist commercial lending. Lenders won't want to get involved under a normal residential mortgage product.
    • Tom99
    • By Tom99 21st Apr 18, 1:02 AM
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    Tom99
    • #5
    • 21st Apr 18, 1:02 AM
    • #5
    • 21st Apr 18, 1:02 AM
    Have you looked into the tax situation?
    Are you planning on selling the new build?
    Since your intention at the outset might be to develop/sell you might be liable for income tax rather than CGT.
    You will need to tie down the value of the new build site at some point and a high purchase price for the site would mean lower tax on sale.
    • tonyminides
    • By tonyminides 21st Apr 18, 6:14 AM
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    tonyminides
    • #6
    • 21st Apr 18, 6:14 AM
    Update
    • #6
    • 21st Apr 18, 6:14 AM
    Ok. I told the lender. They said when I want to split the land, they will look at the valuation done during the purchase and if it has insignificant value, they will not object and will give consent to split the deeds. They suggested that I ask the valuer to put in nil value on the valuation, if he believes it to be if no significance.
    • Craig75
    • By Craig75 10th May 18, 10:29 AM
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    Craig75
    • #7
    • 10th May 18, 10:29 AM
    Multiple Dwelling Relief?
    • #7
    • 10th May 18, 10:29 AM
    I am looking to purchase an investment/development a few doors down from where I live.

    Our offer has been accepted on a 9 bed HMO with 3 bungalows that has planning for 7 flats and 4 houses.

    We thought the purchase would be classed as Commercial at 5% SDLT, however, we are now led to believe it is classed as residential 13% which kills the deal. The current 9 bed HMO and 3 bungalows are all on 1 title and in a company name. The vendor does not want to sell as an ongoing concern.
    Freehold development & investment opportunity with planning permission for 7x flats and 4x houses

    Current Use - Residential investment producing 85,318 per annum gross (A 9 Bed fully licenced HMO and 3x1 bed bungalows).

    Planning permission to form 6x one bedroom & 1x studio flat (conversion) and 4x terraced houses !!!8232;(new build).

    Could I split the title into 5 titles simultaneously on completion (1 title for the HMO and 4 titles for the 4 houses, or even 7 individual titles for the flats that will be built and 4 titles for the houses)? Would this qualify for Multiple dwelling Relief?

    If splitting into 5 titles the SDLT would equate to 62k

    If splitting to 11 titles the SDLT would equate to 42,493

    As it stands the SDLT would be 125,750

    What would the estimated cost be to split the titles?
    I hope someone can help...
    • da_rule
    • By da_rule 10th May 18, 10:49 AM
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    da_rule
    • #8
    • 10th May 18, 10:49 AM
    • #8
    • 10th May 18, 10:49 AM
    Craig75 - you have resurrected 2 old threads and posted the same question. Forum etiquette dictates that you shouldn!!!8217;t do this.

    Anyway, you may need to revisit your stamp duty calculations as the transactions will be classed as linked transactions.

    When it comes to splitting you can ask the seller to sell you the individual pieces of the whole title. This would generate new title numbers for those individual pieces. So you would essentially have 5 transfer deeds instead of one. The cost would then be 5 x the Land Registry registration fee for each transfer which will depend on the value given to each transfer.

    Assuming this is England/Wales you wouldn!!!8217;t be able to split the flats out as they will be leases granted out of a freehold title not freehold titles themselves. Once you!!!8217;ve done the works to the building to build the block, you will grant leases out of the freehold title, the leaseholders will have a leasehold title that is attached to your freehold title.
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