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Alex J.
Alex J., Solicitor
Category: Property Law
Satisfied Customers: 3695
Experience:  Two years conveyancing experience.
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I am interested in purchasing a freehold terraced property

Resolved Question:

I am interested in purchasing a freehold terraced property with one title deed that has a self contained flat on the lower ground floor with its own entrance door and no internal access to the upper floors. The upper floors are arranged as a 3 bed maisonette with own entrance doors. In future if I wanted to sell the basement flat but retain the upper floors would you recommend the creation of a lease or a share of the freehold and what would be the approximate costs? Is my mortgage lender able to object to any change to the title/would they likely reassess my mortgage based on the upper floors remaining under my ownership.
Submitted: 2 years ago.
Category: Property Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
If you are planning on selling the basement flat, you will only be able to sell it on long lease - normally between 120-999 years. This is because any prospective buyer would not be able to get a mortgage on a share of the freehold alone. If you want to grant the buyer a share of the freehold as an incentive in marketing the property then you can do that as well. Once you sell a long lease in the lower flat this will obviously significantly devalue the freehold of the building anyway.
You mortgage lender will almost certainly have to consent to you selling a long lease over part of the property and will likely want a share of the proceeds to be repaid towards their debt, because selling part of the property to the burden of a lease will devalue you their security.
Unless it is appropriate there is no immediate need to tell the bank of your future intentions of the property.
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.

Thanks AJ, could you give an approximate cost of of the legal work to provide a lease/share of freehold document?

Regards

Barry

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
You will need to prepare a draft lease ideally before selling the property. To draft a new lease at a local solicitor about £750 -£1000 plus VAT plus another £100-£200 for registering, although the buyer could pay the registration costs.
In my opinion the best way to deal with the freehold (this assumes other than the flat, the property has no development potential in the common areas) - you give yourself a long lease for your property as well - then transfer the freehold into a company limited by guarantee. You then make the two long leaseholders (you and your buyer) the members of the company (you could even give yourself slightly weighted voting rights to deal with the common areas). Then if you sell your flat (i.e your long lease) the freehold share transfers automatically. This will cost about £250-£500 plus VAT.
Kind regards
AJ
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