surrendering car park space alone (part of the title)

[ashgnana]

We have been really unlucky in our house move so far , 3 buyers pulling out a few weeks/months after the initial offer for various reasons and the vendors of the property that we were interested in lost patience(fair enough)with us, we have incurred some costs so far in this process and we are keen to cut our loses down and hence decided to sell the parking space we have to the landlord. As the situation is not very straightforward and there are fairly high charges in applying for a BTL mortgage i want to find out if what we are talking is workable in the real world... hence would appreciate any help/advise.

1. We have an existing mortgage for our title/flat
   
2. Title includes a car park space and the flat itself
   
3. We have anything between 65-70%(depending on the valuation) of the value of the flat outstanding with the existing lender
   
4. We are planning to move out of the flat and rent our self and hence we no longer need the car park space
   
5. We have discussed and agreed a premium with the landlord for surrendering the car park space
   
6. To make this legal and having to avoid discussing with the existing lender(we think he might charge us too much money - as they are losing aprt of what they are secured against), we are planning to apply for a BTL mortgage stating that we would like the valuation and the mortgage only on the flat and that inform them upfront that we are to surrender the parking space to the landlord
   
7. Once the new lender values and provides the mortgage(and the old lender is out of question) we are planning to subsequently alter the title with the parking space surrendered(to the landlord) and the flat being mortgaged with the new lender.
   

Is the above scenario

1. Technical possible
   
2. Any legal issues foreseen
   
3. Would the new lender accept such an application/approach ?
   

Sorry for the long post!!!

[KickAssAngel]

Why do you want to give up the parking space? Won't the flat be easier to rent, and get more money, if it has a space?

[JellyTipisthebest]

If you wouldn't of bought it without a parking space dont sell the space you could rent it out.

[wowfudge]

I don't think your plan sounds like a good one. If you want to sell the parking space to cover your losses so far (would be helpful to know how much they are) and let out the flat rather than sell, how are you going to afford to buy a new place? It sounds as though your finances are really tight. How are you going to cope with any void periods with the flat? Will you be able to let it without the parking space? What if you can't buy anywhere and have to rent; can you afford to pay rent which may be higher than a mortgage payment and pay the buy to let mortgage?

Oh and if the BTL mortgage is just to avoid issues with the current lender, you do know you cannot live in the flat yourselves once you have the BTL mortgage? If you still plan to sell then it is madness to have incurred more mortgage fees and potentially have to pay early redemption fees to the BTL mortgage provider.

Have you spoken with a whole of the market independent mortgage broker about other options?

[Spickle]

If you intend to involve a solicitor in a Transfer of Part, the solicitor will be obliged to inform your current lender, as they will need to act on behalf of the lender as well as you.

I personally would not sell off the parking space - depending on where you are located, parking spaces are very sought after and it could seriously devalue your flat as it could be less desirable.

[Sooverthis]

Sounds like a complicated non solution that devalues your flat, breaches your mortgage conditions and leaves you unable to live in the flat. Plus your solicitor is unlikely to go along with it. How much is your parking space worth, just rent that out.

[YelloDraw]

Makes no sense to me. Just rent out the space?

[ashgnana]

Thanks every body for the suggestions, questions and the overwhelming interest. Especially wowfudge for having thought of all possible scenarios where we could potentially be caught out - much appreciate it.

Will try and give my thoughts behind the proposed action> We are not that bad financially - have a healthy deposit to buy a reasonably good terraced property in some parts of Richmond borough, where we would like to go. The urge to move out is quite overwhelming , we were pretty close to exchange on the first occasion and had an offer accepted for a property that we saw a great potential - our hearts and minds are no longer here - but unfortunately it went downhill from there. The issue with the sale has reduced our capacity to go for something bigger and better straightway.We are planning to rent ourselves in the interim if we don't find anything suitable in the next couple of months and to answer wowfudge specifically , we do have some emergency funds etc. to help us buy if it gets hard (hopefully not too hard).

We owe the landlord some money i.e. significant part of the losses i mentioned earlier (for a retrospective license for some improvements done 2 years ago) because of a screw up by the then managing agents and he is now demanding 7.5 k for the license to be issued(we dont seem to have too much option with this) and has agreed to reduce it to 2.5 k if we surrender the parking space - which i personally thought was a good deal given that i would have to take additional stress in marketing it myself if i rented it out. Secondly during our efforts in the last 6 - 9 months in marketing the property, we have realized that the parking space doesn't really seem to matter much for the potential buyers (2 out of 3 accepted offers were from BTL parties and almost 70% of the offers we had that met the asking price where all BTL's) and the neighbors below us have done exactly the same and have tenants for the last 1 year or so and they didn't mind the lack of parking space. They have a garage as part of their sale and we had the parking space.

As we could not sell it and are forced to rent it , we thought we could salvage some money out of the space. Is this that bad a reasoning ?

[wowfudge]

Hmm - still not sure it's a good idea. How many of the flat owners and tenants have cars? What is the value of your flat without the parking space? I'm guessing the difference is more than £5k. Can you agree a payment plan for the licence fee instead or re-mortgage not on a BTL basis to release some of the equity and pay the landlord that way? Anything you can do to get the charge reduced?

On the plus side, if you have the licence issue sorted, a future sale will be more straightforward.

[KickAssAngel]

Are you sure about the 7.5k? How much have you looked into that? It seems a lot of money for a license, and why would that be paid to the landlord?

I'm absolutely NOT in the know about this, but wouldn't a license be paid to the council for works carried out? I'm sorry, but that seems like a lot of money, and possibly them trying to con you out of the space.

Personally, I'd do everything I could to see if that could be reduced, keep the space and just hold tight until my finances were in the clear. Doesn't matter where your hearts and minds are - your bums are in flat that you can afford.

btw - I rent our a small flat in Kent. Without a parking space it wouldn't rent. I know London is different, but land is expensive. Don't give it up without a fight.

[wowfudge]

KickAss your comment about bums made me laugh. It sounds as though the landlord/freeholder is trying to blackmail you. I'd be carefully examining the lease and doing all I could to find out whether £7.5k was anything like reasonable.

Don't overcomplicate your finances OP. If you lie to a mortgage lender and get found out, you may find yourselves living where you are a hell of a lot longer as they won't lend to you on anything else or, potentially, being in breach and the consequences that brings. Could you get a personal loan for a shorter period to cover the licence costs instead? What about not using all your equity for a new place and instead using the balance to cover the costs you've incurred?

[Spickle]

£7.5k for a retrospective licence sounds ridiculously high and I do conveyancing! Can you write to the managing agents direct rather than go through the landlord? While fees for issuing notices etc can be steep, I don't think it would be anywhere near £7.5k.

[Believeitornot]

Challenge the £7.5k

Also we recently sold a flat with no parking space. We lived on a road with a yellow line but parking nearby. We did eventually sell but having parking would have made it quicker and easier. We had a lot of interest which faded as soon as viewers knew there was no off street or even street parking.

[lastnightiwenttomanderley]

The fact that your landlord (freeholder?) wants the space suggests that it is valuable. Keeping it will maintain the value of your property and potentially attract a higher rental income (or, you could let the flat and parking space separately which, depending on location, could be much better financially).

Have you checked out the BTL position and availability of mortgages at your LTV? Im not sure if you're looking to release equity from the flat to supplement a deposit for the new place , if you are then this will increase your LTV and lenders are much more wary. It's quite telling that some of the previous buyers were doing it as a BTL but then pulled out - do you know why? You say that the parking isn't a factor for BTL but presumably the potential owners were factoring in the parking space when considering potential yields and ease of letting.

Without getting dragged off on a tangent, it sounds like a lot of hassle to save yourself 5k, particularly as I expect the parking space is worth more than that.