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Where Taxpayers and Advisers Meet

tax liability

Posts: 20
Joined: Sun Feb 13, 2011 12:51 am

tax liability

Postby limoges » Mon May 11, 2020 2:56 pm

I am the executor of a property that comprises a large freehold semi detached house that was divided into two self-contained flats many years ago, and both of which are registered with HM Land Registry.
The deceased owner of the upper flat is the freeholder of the lower flat which is held by its leasehold occupant on a 199 year lease registered with H M Land registry.

The upper flat owned by the deceased is therefore a freehold flat held in the name of the deceased and registered with HM land registry.

I have been informed that the deceased’s freehold flat is unsellable because flats cannot be sold as freehold but must be converted to leasehold and registered as such with H M land registry at a legal cost of several thousand pounds.

As such a cash amount is not available in the deceased estate, and as there will be a tax liability to be met in due course, any advice on the disposal of a freehold flat would be much appreciated.

Posts: 1092
Joined: Fri May 16, 2014 3:47 pm

Re: tax liability

Postby AGoodman » Thu May 21, 2020 10:29 pm

1. Not a conveyancer but I would be very surprised if they could not be sold at all - not least because the buyer could immediately create a lease if they wanted one.
2. A cash buyer absolutely can buy a freehold. I would only expect a problem if the existing lease was drawn up on poor terms (e.g. the leaseholder did not have to contribute to building maintenance).
3. If anything, maybe it makes it harder to get a mortgage because the banks are expecting a single freehold property or leasehold flat. They need to tick their boxes.

On the costs side, if you were selling, I would expect your conveyancer could do both jobs and take the fees for both from the sale price.

You don't mention who told you a freehold was unsaleable. I would call a solicitor specialising in property (making sure to speak to an actual solicitor or licensed conveyancer) and get a second opinion.

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