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Original poster

Hypothetical question about buying the flat next door

33 replies

onlychildhamster · 21/10/2021 16:36

I own a 2 bed London flat and its on the second floor (top floor) in a 1930s block of 6 flats (2 flats on each floor). If I buy the flat next door but continue living in my current flat- using the rooms in the second flat (which has the same layout) as home office, guest room, playroom for future child etc, would the second flat be classified as an empty home?

www.barnet.gov.uk/housing/private-housing/empty-properties

I am aware I would have to pay double council tax bills and service charge but I think it would still be cheaper than buying a whole house of the same size in the same area (and I like my area and my flat very much), especially if the cost of flats really dip. Also if I find it financially difficult, i can still rent out the second flat which I wouldn't be able to do if I bought a whole house and I can also rent out the second flat in later life for retirement income. Hence for all those reasons, I would not be combining the flats (don't think its even allowed and doesn't make financial sense anyway).

But if its classified as an empty home, that would not be good. I would be using that flat daily since my study would be there and I would be keeping stuff there but of course the main bedrooms/living & dining space would be in my flat.

Of course this is a hypothetical question so please be kind :)

OP posts:
Original poster
onlychildhamster · 21/10/2021 16:37

I was thinking of buying a 3 bed flat in my area too, but I don't really like a lot of the flats I saw or the tiny terraces either...

OP posts:
ElliePhillips · 21/10/2021 16:43

Can't help with an answer OP but watching (and hopefully bumping up thread) with interest as I'd like to do the exact same thing as you in my building.

RedCarsGoFaster · 21/10/2021 16:44

Would you be able to negate this by joining them so they are one property? Even by a temporary wall and door?

Original poster
onlychildhamster · 21/10/2021 16:51

@RedCarsGoFaster would have to get freeholder permission for that and don't think its worth it unless you have lots of money and just doing it cos you can. People wouldn't pay for a large joined up flat, they would just buy a house or even a bigger flat. Unless its 2 maisonettes being converted back into a 5 bedroom house (which it once was anyway).

OP posts:
Rollercoaster1920 · 21/10/2021 16:53

You could register your husband / partner (if you have one) in the second flat. Both get single occupier council tax discount?

Original poster
onlychildhamster · 21/10/2021 16:57

@Rollercoaster1920 i have a DH. But wouldn't that be wrong/fraudulent?

I am thinking that it must be easier than this, cos so many Britons have country homes and at least I am not buying in some quaint village in Cornwall where local incomes are way out of sync with my budget! And i will use these rooms everyday.

OP posts:
minipie · 21/10/2021 16:59

I would imagine it may be classed as a second home? Which means it’s not empty, but does mean you’ll pay second home stamp duty etc.

minipie · 21/10/2021 17:00

Empty home generally means not used at all - eg owner has died or it’s owned by an investor landlord who hasn’t bothered to let it out

MotherOfCrocodiles · 21/10/2021 17:06

Definitely not wrong to have DH own the other flat! In your position I would also get him to live there, two separate but adjacent flats sounds like paradise! Appreciate you may not agree :-)

friendlycat · 21/10/2021 17:08

It would be classed as a second home with all the implications of a second home.

You would pay second home stamp duty, council tax and all the utilities on it including contents and buildings insurance etc.

Then when you sell it you would be subject to capital gains tax on it.

Original poster
onlychildhamster · 21/10/2021 17:12

@friendlycat the capital gains tax would be quite easy to dodge in a way; if we ever needed to sell either flat, we would just sell the one we live in now (which we bought as FTB) and move into the second one.

And then we would live in the second one until we both end up in care homes or die.

OP posts:
MrsSchadenfreude · 21/10/2021 17:13

Friends of ours did this. They got permission to knock through with a doorway, on condition that it was put back to two flats again when they sold it. It worked brilliantly for them.

minipie · 21/10/2021 17:15

It doesn’t work like that on CGT onlychildhamster

friendlycat · 21/10/2021 17:22

Capital Gains Tax on a second home doesn't work like that.
Otherwise everybody who owns a second property would do it!

sociallydistained · 21/10/2021 17:23

@MotherOfCrocodiles

Definitely not wrong to have DH own the other flat! In your position I would also get him to live there, two separate but adjacent flats sounds like paradise! Appreciate you may not agree :-)
This is the dream. I wish the flat next door was available!
ppp4321 · 21/10/2021 17:58

@friendlycat

Capital Gains Tax on a second home doesn't work like that. Otherwise everybody who owns a second property would do it!
I thought it could work like that? If you live in one for a certain period, doesn't that become your principal primary residence for CGT purposes? Meaning you could sell property number one, live in property no 2 and later down the line designate property 2 as your primary residence for CGT? I may well be missing something....
friendlycat · 21/10/2021 18:15

When you own two properties you have to nominate one as your main residence. You have two years in which to do this.

You don't actually have to nominate your main residence as the one that you live the most in but you have to nominate one of them. The one you nominate is not subject to CGT when you sell it as that's your main residence but the other one is subject to CGT and you pay tax on the difference in price from which you bought it at and what you sell it at.

friendlycat · 21/10/2021 18:19

Also married couples can only have one principle private residence. You can't name your husband as the owner of the second property.

ppp4321 · 21/10/2021 18:23

So (if I'm understanding correctly), you live in property 1, designate it as your primary residence for CGT and sell it. You then move into property 2, designate that your primary residence and after a few years, that would also be free from CGT?

ppp4321 · 21/10/2021 18:25

(I'm embarrassed to admit I studied CGT when I qualified as an accountant quite a few years ago...)

garlictwist · 21/10/2021 18:36

Divorce your husband, get him to buy the other flat? (too drastic?)

minipie · 21/10/2021 18:38

ppp4321 Property2 will only be free from CGT for the gains during the years it was your designated primary residence. Any gains on property2 during the years while you had property1, and property1 was your primary residence, will bear CGT.

I don’t know exactly how they work out what portion of the gains were during which years (and hence which bear tax and which don’t) but there is some sort of method.

Albless · 21/10/2021 19:16

Interesting thread as I also have 2nd floor flat on a block of 6. My neighbour rents hers and is moving next year, and I was thinking of asking her landlord if he’d be interested in selling to me.

I agree with pps that not an empty property, but 2nd home instead.

ppp4321 · 21/10/2021 19:20

minipie thank you, makes sense. We're wondering about a buy to let flat so trying to work out the various tax costs on a second home

friendlycat · 21/10/2021 19:28

@ppp4321

minipie thank you, makes sense. We're wondering about a buy to let flat so trying to work out the various tax costs on a second home
Look it up on line as it does explain it all. The rules changed last year but lots of websites explain all the implications. Also stamp duty is higher on second property.

You only pay tax on the price increase of the second property, or the nominated second property, as that’s the gain from the purchase price. Each year you have a capital gain amount but beyond that amount you pay CGT. Applies to the selling of shares etc.