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Process of legally splitting a property

10 replies

Knickersinatwist36 · 27/04/2024 12:54

(Also posted on legal)

Good morning,
Short story (turned out to be a long story, sorry) is, my sibling and I inherited a very run down property and we have decided to keep it. However my sibling can't afford the maintenance of the whole house.
The property consists of what was (when first built in c.1800) two properties (one lived in, the other used as storage). It was all registered as one address with council tax and one water mains and the lived in property handled all the bills (think of a steading type set up).

Unfortunately the storage house deeds were lost (they were with a building society which changed hands at least four times and, after the mortgage was paid off were presumably lost in one of the takeovers). It has been quite stressful and our solicitor has sorted it all out with land registry. We will officially own it on Tuesday, rather than simply having possession, at which point I will buy my sibling's half of the storage house from them. It already has a separate address (sorted by our solicitor) so when I buy it I will have to separate out everything from the main house.

I have three questions:

  1. Where can I find a single list of things I need to do to in order to make sure it is a fully independent address (I have seen some websites but most talk about finance and I don't need that), thinking utilities, council tax, do I need a letter box? Does it make any difference that the house I am buying is derelict?

  2. Will my sibling have to pay capital gains tax? I had a redbook valuation done on the property and have agreed a sum to pay my sibling to buy them out. It is worth hardly anything, derelict and I will be spending a lot on making it into a house. At the moment it is three separate spaces each with their own door, it is structurally unsound but with full planning and listed building consent and full architectural plans to progress (and a builder). My sibling doesn't own a property except the half they own with me of the liveable part of the property. Neither of us currently live there yet.

  3. Is there anything else you can think of I might need to do?

I have enjoyed the whole process so far but this bit seems so important I would hate to get any of it wrong. Any help would be much appreciated.

OP posts:
Seeline · 28/04/2024 10:22

Does it have planning permission to be used as two independent dwellings?

Knickersinatwist36 · 28/04/2024 11:37

Yes, solicitor sorted that out. (I think, hmm will double check tomorrow). Good point!

OP posts:
Bumblebeeinatree · 28/04/2024 11:49

Water, Gas, Electric, Sewage, Council tax (both properties will be affected?), Post Office, House Insurance may be difficult, Electoral Role? Register the address? Is the structure safe? You may need an inspection for insurance. Party wall arrangements?

Seeline · 28/04/2024 12:01

Knickersinatwist36 · 28/04/2024 11:37

Yes, solicitor sorted that out. (I think, hmm will double check tomorrow). Good point!

It would have needed a formal application to the Council with plans etc if it didn't already have permission.

Knickersinatwist36 · 28/04/2024 12:19

Bumblebeeinatree · 28/04/2024 11:49

Water, Gas, Electric, Sewage, Council tax (both properties will be affected?), Post Office, House Insurance may be difficult, Electoral Role? Register the address? Is the structure safe? You may need an inspection for insurance. Party wall arrangements?

Some of these are already sorted, it has never been connected to the main house for lots of things, has its own boiler and electricity and gas meters.

However, I hadn't considered party wall agreements or anything g like that, I guess covenants too - some of the windows look directly into the kitchen of the lived in house but have had the shutters closed for years.

That's a really good shout, thank you!

OP posts:
Knickersinatwist36 · 28/04/2024 12:22

@Seeline

It would have needed a formal application to the Council with plans etc if it didn't already have permission.

thank you you are right, I don't know if this is the case, I will email them today to see if this needs to be done (it probably will), thank you so much!

OP posts:
Seeline · 28/04/2024 12:34

Some of these are already sorted, it has never been connected to the main house for lots of things, has its own boiler and electricity and gas meters.

Although you say this, so how has it been occupied as a single dwelling up until now? Has the storage part ever been given permission to be lived in?
It sounds a very confused property 😁

Knickersinatwist36 · 28/04/2024 13:23

Seeline · 28/04/2024 12:34

Some of these are already sorted, it has never been connected to the main house for lots of things, has its own boiler and electricity and gas meters.

Although you say this, so how has it been occupied as a single dwelling up until now? Has the storage part ever been given permission to be lived in?
It sounds a very confused property 😁

Oh, it's a complete nightmare. I keep finding more and more problems - all of which I would have to sort out anyway if we did want to sell. Relative was a hoarder and both bits of the building were FULL of random junk, extremely valuable objects, and all the paperwork in the world. (It took 21 months to clear it to liveable standard).

One room we refer to as the shop because it has a shopfront and when we were looking into all of this originally the council panicked and asked when it had stopped being a shop because it should have been paying business rates, we were able to confirm it hadn't been used as a shop since about 1850.

I don't know if it has residential status but I would guess it did because the council tax covered the whole building and it had the whole thing down as residential. What that means in practice I don't know.

OP posts:
Another2Cats · 29/04/2024 12:27

"...and our solicitor has sorted it all out with land registry."

This is the important part. I take it they have done a Form TP1 (transfer of part of registered property) with a map that shows exactly which bit of the property is being split off to create a new title?

"...it is structurally unsound but with full planning and listed building consent and full architectural plans to progress (and a builder)."

Did the planning permission also include use as a new dwelling, or was this just described as an annex or alterations/extensions to the existing home?

You need explicit planning permission to specifically create a new dwelling.

Once you have planning permission for creating the new dwelling then you can set about developing it.

Where can I find a single list of things I need to do to in order to make sure it is a fully independent address (I have seen some websites but most talk about finance and I don't need that), thinking utilities, council tax, do I need a letter box? Does it make any difference that the house I am buying is derelict?

After you have obtained planning permission then you contact the part of your council that is responsible for new addresses. If you google something like "XXX Council Street Naming and Numbering" you will find it.

The local council are responsible for giving your new property a street number (or name) and they will also inform Royal Mail who will then give your new house a post code.

They will also inform other council departments such as Council Tax, Electoral Registration, Building Control, Waste Management etc. so that everybody knows that there is a new dwelling.

They will also notify the Land Registry of what number they have given the new property so that when anyone looks for the title they will be able to find it. I'm guessing that, at the moment, the new title is described as something like "land to the south of house number XX, on YY street" and so the Council will let them know what the new number is.

Apart from that, the only thing that you are required to do with the house number is to actually ensure that the new number is displayed and clearly readable.

Once you have planning permission then it is down to you to sort out the utilities etc

"...it has never been connected to the main house for lots of things, has its own boiler and electricity and gas meters."

This makes everything so much easier. Once you have planning permission and received the new house number from the council and the post code, then write to the utility companies and explain that those meters now relate to a separate dwelling with number XX, postcode ABC DEF

"Will my sibling have to pay capital gains tax? ... My sibling doesn't own a property except the half they own with me of the liveable part of the property. Neither of us currently live there yet."

My understanding is that, any CGT is based on an increase in the value of the property from the date that it was inherited. So, there is only any CGT to be paid if he has made a profit above what the probate value was.

Eg, his share of the property at the time you inherited it was £200k. He sells it to you for £200k - no profit, so no CGT.

If instead he were to sell it to you for £250k so he makes a £50k profit over (21 months? two years?) then there may be CGT payable. Whether he has to pay in this situation will depend on whether he has notified HMRC that he has made an election to make this house his main residence instead of wherever it is he currently lives.

ps

"...the council panicked and asked when it had stopped being a shop because it should have been paying business rates, we were able to confirm it hadn't been used as a shop since about 1850."

This bit did make me smile.

Mumofteenandtween · 29/04/2024 12:38

No advice but I would love to read a blog about it all and What Happened Next.

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