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If I buy a flat that comes with a share of the freehold of the property and the property has a shop on the ground floor can it be classed as a mixed use purchase for SDLT purposes?
I'm not buying the lease of the shop I'm just buying the lease of the flat and a 50% share of the freehold.
I doubt so.
First you would buy a long lease of the flat, hence pure residential, and (potentially, but I will explain why not in reality) the share of freehold (mix commercial/residential, hence commercial) as a separate title.
Not in reality, because my understanding is that if the commercial part is more than 25% of the total building, the freehold would stay with the commercial shop, and the flats sold as long lease only. But even if below 25%, I never seen any flats with share of freehold in a building that is mix commercial/residential.
Different could be if the shop has a 999y lease at peppercorn (virtual freehold), and the freehold is represented by the rest of the building, hence the flat, that way you own a mix residential/commercial building where in reality is a flat plus freehold with shop sold as virtual freehold.
Said that, look for solicitor advise, it is a complex topic, I own a virtual freehold of a shop, and in another case I own a freehold of a mix/residential commercial with two residential flats sold off, and I am looking at other deal mix residential/commercial and I gain experience via the deal done in the past as mix etc etc
Thanks for the reply.
As it turns out the flat (four bedsits) are to be sold with the freehold (no share of freehold) and the shop will already be on a 999 year lease. So I think that this will qualify as a mixed use purchase, but please correct me if you think otherwise.
Yes, I think that the Freehold you buy is classified Commercial, being mix residential/commercial - but please double check with your solicitor.
I am looking exactly at a very similar deal, where I would buy the entire freehold "in a way", specifically the Freeholder would sell the 999y shop to my SIPP (already two commercial property own via my SIPP), while I would buy the Freehold (with virtual freehold shop sold-off) that consist of two flat, with a Limited I am already using/having to own other Freehold/property investments.
If the properties are separate then I think this is a mixed use and the SDLT additional 3% wont apply. Only commercial rates will apply.
If your solicitor needs some convincing then give me a shout (email@example.com)
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)