How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Aston Lawyer Your Own Question
Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10451
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
16368554
Type Your Law Question Here...
Aston Lawyer is online now

I am a lease holder on a terraced property which I live in,

Resolved Question:

I am a lease holder on a terraced property which I live in, and a director of the company that owns the freehold. I would like to put my 24 year old son's name on the lease to enable him to be a director (a condition for being a director is that you are a leaseholder.) Is it possible to be a leaseholder and only to own say a £1 stake in the property?
Yes he does live in the property with me.....for now, but may not in the future.
Submitted: 1 year ago.
Category: Law
Customer: replied 1 year ago.
I live in a co-housing community which shares 24 acres and a large community centre ans own my leasehold self-contained house. It would be good if my son, who also lives here, could be part of the decision making process as a director, and the only way of making him a director is to make him a leaseholder. Are there any pitfalls here? Don't need money to change hands.
Expert:  Aston Lawyer replied 1 year ago.
Hi,Thanks for your enquiry. Is there a Mortgage over your property?Kind RegardsAl
Customer: replied 1 year ago.
yes, only £15,000.
Expert:  Aston Lawyer replied 1 year ago.
Hi,Thanks for your reply.Well, first and foremost, there is nothing stopping you from transferring your Leasehold interest into the joint names of yourself and your Son. To enable this to be done, you would just need to instruct a local Solicitor to prepare a Land Registry Transfer document, which is signed by both of you, and then registered at the Land Registry. The Transfer could show that your Son paid a £1 for example or nil consideration. No Stamp Duty would be payable. The only 2 financial points you would have to be made aware of is that there is likely to be fees payable to the Management Company who own the Freehold, notifying them of the transfer and the issue of any share certificate. You may be familiar with this, as you are a Director. The only point is that as you will be transferring a 50% share of the property to your Son at an undervalue, if you were to sell the property within 5 years, you would be required to pay for what is called a "Deed of Gift indemnity policy" which acts as an Insurance policy for the Buyer, in that under Insolvency laws, if someone is made bankrupt within 5 years of making a gift, the Trustee in Bankruptcy can claim back the nature of the gift (ie 50% share of the property). I'm not saying you will become Bankrupt, but this policy is something you would have to pay for, come what may. The cost is approx. £200-£300 depending on the value of the property. One stumbling block for you is your Mortgage. Unless you were to pay off the Mortgage, you would need the Mortgage Lender's consent to the transfer, in that they will require your Son's name to go on the Mortgage (all Lenders insist that whoever own a property is also on the Mortgage). There should not be any reason why your Mortgage Lender would refuse to add your Son on to the Mortgage (unless he had poor credit history or already has a Mortgage), but it is an application you will need to make.I hope this assists and sets out the legal position.Kind RegardsAl
Customer: replied 1 year ago.
Thank you. I wonder if you could comment on the following to help me u nderstand the 'in common' v 'joint' issue.. I found this on a leasehold site.
"Several features distinguish tenants in common from joint tenancy: A tenant in common may have a larger share of property than the other tenants. The tenant is also free to dispose of his or her share without the restrictive conditions placed on a joint tenancy. Unlike joint tenancy, tenancy in common has no right of survivorship. Thus, no other tenant in common is entitled to receive a share of the property upon a tenant in common's death; instead, the property goes to the deceased's heirs."
I suppose there might be an inheritance tax issue here. I am not trying to 'give' my house to my son (in fact I have 3 children)...it is only that I want him to be a director of the company that owns the freehold. I understand the point about gifts with strings attached. I repeat this is not an inheritance tax dodge....although I do need to know my death might affect the situation since my son will be one of the three beneficiaries of my estate..
Expert:  Aston Lawyer replied 1 year ago.
Hi,Husband and wives would normally hold a property as joint tenants- this set up is similar to a joint bank account, in that whoever survives, inherits the whole of the property.Tenants in common would normally be used by other family members, and the parties can decide how much of the property each owns in percentage terms. So, in your scenario, I would suggest this is the preferred option, and as you have other children to consider, there is nothing stopping you granting your son say a 1% share in the property and you retain the remaining 99%. He would still be a legal owner of the property, and would not affect his right to become a Director.You would then be free to leave your 99% equally between your 3 children in your Will.(For Inheritance tax purposes, if you gift cash or property to someone, and you still retain a financial interest in it, you are still deemed to own that cash/property on your death. So, if you were to gift a 1% or whatever percentage share to your Son, this would not reduce your Estate for Inheritance tax purposes, as you would remain living in the property).I hope this clarifies the position to you.Kind RegardsAl
Customer: replied 1 year ago.
yes thank you. You have confirmed what I thought. So to recap:
1) pay off the mortgage to avoid admin costs of putting him on the mortgage since he'll not be owning anything but the smallest percentage of the house. (Do I still need to do that if he will be 'owning' a nominal percentage?)
2) go to a solicitor and request his name be added to the lease as a tenant in common (what is that likely to cost?)Is there a minimum percentage or sum I could 'give' him? ie £1?
Expert:  Aston Lawyer replied 1 year ago.
1. It certainly would help if you could pay off the Mortgage before you transfer the property. If you don't, you can still proceed and grant your Son a 1% share, but it is the extra admin and the fact that your Son will be as much liable on the Mortgage as you are, which he shouldn't really moan about, but with him only owning 1%, he may be!2. The Solicitors costs will depend on whether the Transfer is subject to the Mortgage, as there will be a lot more work for your Solicitor to do, if the Mortgage is still in place, as he will also need to receive instructions from the Bank/B society. If you pay off the Mortgage, and then instruct a Solicitor, he is likely to charge £250-£300 plus VAT but if the Mortgage is still in place, the fees are likely to be double. Either way, there will also be a Land Registration fee to pay, based on the value of the property and which will be between £40-£90. I can't comment on whether there will be any fees payable to the Freeholder/costs involved in your Son becoming a member of the Management Company.If I have helped, I would be grateful if you could rate my answer, so I can get credited for my time.Best WishesAl
Aston Lawyer and other Law Specialists are ready to help you
Customer: replied 1 year ago.
of course! You have been very helpful.
How does it work? Is this consultation part of my free week or do I pay £38?