Own Freehold of Flats, issue leaseholds?

[sptitch93]

Hi all! 

I am currently purchasing two flats, both freehold (one ground floor and one first floor flat). This purchase will mean I will own the whole building (there are only two flats in this house that has been converted around 10/15 years ago). 

I've been going through the dilemma of purchasing through an LTD or not and finally concluded that LTD was the way to go; however because I am a first time landlord and the two flats are freehold I (my broker) has struggled to find competitive interest only mortgages and consequently wipe out the benefits entirely (and some) of going the LTD route. So now am purchasing the flats in my own name. 

Can I own the freehold of the land that the two flats are situated on in my own name (self-assessment) and issue two leaseholds (one for each flat) and have these in my LTD? How do you issue a leasehold when you are freeholder?

Many thanks in advance!

[Conrad_Paton]

Hi

As far as I understand it, you cannot own all the leasehold titles and freehold title in the same name. All titles would then have to be merged to form a new freehold title incorporating the whole block.

However:

On 1/28/2020 at 1:18 PM, sptitch93 said:

 

Can I own the freehold of the land that the two flats are situated on in my own name (self-assessment) and issue two leaseholds (one for each flat) and have these in my LTD? 

Yes (Subject to company set up e.g. have another person as shareholder)

Or, flats in LTD name, freehold in yours (subject to lenders criteria), and company formation.

So long as you have title diversity so that (in this case) you or a company solely owned by you does not have full control of the 3 titles in question.

You have one, husband/wife has another, company with both parties as shareholders owns the freehold etc etc.

Or set up a freehold company with shares issues to the owners of each flat, transferrable on sale of the flat to the new owners. (So in effect 2 X share of freehold flats with an administrative freehold title).

The main problem you would have is with lenders criteria. You are better off speaking to a specialised broker that can gain finance on this sort of thing. Most BTL lenders do not like this set up for obvious reasons.

On 1/28/2020 at 1:18 PM, sptitch93 said:

How do you issue a leasehold when you are freeholder?

I assume you mean how do you issue notices or extend a lease?

In exactly the same way if you didn't have a financial link to the leasehold. Speak to a leasehold solicitor about what you wish to do.

If you extend the lease then it will still require registration with the Land Registry, you can't simply amend an existing lease with a couple of signatures in the margin.

Hope this helps

Conrad

[sptitch93]

@conrad_paton Thanks for the advice! Really appreciate it!