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Aston Lawyer
Aston Lawyer, Solicitor
Category: Property Law
Satisfied Customers: 10451
Experience:  LLB(HONS) 23 years of experience in dealing with Conveyancing and Property Law
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If I own the freehold of a house and the two leasehold flats

Customer Question

If I own the freehold of a house and the two leasehold flats in it, I have a problem getting a mortgage on the flats, because I own both flats and the freehold. What do I need to do to resolve the situation.
Submitted: 2 years ago.
Category: Property Law
Expert:  Aston Lawyer replied 2 years ago.
Hello and thanks for using Just Answer.
I am Al and am happy to assist you with your enquiry.
Under the Council of Mortgage Lenders Handbook rules, for which your Solicitor will need to comply with, your situation and any Mortgage Lender's view is as follows-
"Unless we indicate to the contrary (see part 2), we have no objection to a security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases.
" If the borrower occupying one of the flats also owns the freehold, we will require our security to be:
the freehold of the whole building subject to the long leases of the other flats; and
any leasehold interest the borrower will have in the flat the borrower is to occupy".
Therefore, as it stands at the moment, you should be able to proceed provided you were going to mortgage both Flats with the same Lender, and the Lender has its security registered against the Freehold also.
If this does not apply or is not possible, your only option is to transfer the Freehold to a third party- possibly your spouse if applicable. If not, it is a lot of work, but you could transfer the Freehold into the name of a Management Company, for which each Leaseholder becomes a member. This is likely to cost approx. £300 to set up the Company and another £300 or so in legal fees to transfer the Freehold to the Company.You would then be free to mortgage either or both of the Flats with separate Lenders.
I hope this assists and answers your question.
Kind Regards
AL
Aston Lawyer and 2 other Property Law Specialists are ready to help you
Customer: replied 2 years ago.

That's a great help, only I didn't say that the flats and freehold are in joint names of myself and my husband. Would it work if we transferred the freehold to just one of our names

Expert:  Aston Lawyer replied 2 years ago.
Hi,
I'm afraid it wouldn't help if you just transferred the Freehold into the one name, as both of you own the Leasehold interests.
You could, however, transfer the Leases into one name and transfer the Freehold into the other party's name!
Hope this helps.
Kind Regards
AL
Customer: replied 2 years ago.

I have just one more follow up question- if we transferred to freehold to our son would that resolve the problem

Expert:  Aston Lawyer replied 2 years ago.

Hi,

Yes, that would work (provided he is 18 or over!).

Kind Regards
AL

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