Selling land to family

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    Selling land to family

    Hello everyone,

    I have a question that's entered my mind recently and would like some advice to point me in the right direction, I hope someone may be able to help.

    I have a grade 2 listed cottage on around 0.4 acre, with an old barn thats about to fall down on the side. There is ample access for a driveway, decent size garden and parking spaces. I'd like somehow to sell this land with the barn to my son who can take on this project to renovate (he has renovated historic properties and has 2 rentals which are done to a high standard so he is more than capable).

    Are there options available to split the land off and sell it to him (without planning) allowing him to persue plannig and a conversion etc. This would be ideal for us to be close to our grand kids as they grow up and help us generally as we now are well in to retirement.

    Thank you for any advice in advance,

    Jane, S

    #2
    Just agree a price and instruct a solicitor.

    You may get involved with capital gains tax though and he may not get planning permission.

    Comment


      #3
      If the whole area of land that you own is land associated with your main residence then selling off part of that land does not result in any capital gains tax liability because of Principal Private Residence relief (PPR).

      If you agree to sell it to your son without the benefit of planning permission then the value can be quite low, so that there is no liability to Stamp Duty which starts at £125,000. What you should not do is gift it to your son, as that could mean an Inheritance Tax liability for the next 7 years.
      Agreeing a very low price for a sale is more appropriate.

      Since your property is Grade 2 listed then the barn will require approval for redevelopment from the local planning authority's listed buildings officer as well as from the planning department as would be required in a standard planning application.
      Town and Country Planning Act 1990 and Planning (Listed Buildings and Conservation Areas) Act 1990 both need to be applied.

      Should planning permission be granted and the barn is suitable for residential use then there is no further tax liability if your son moves into the building as his own main residence.
      If he sold the barn in the future then PPR would apply to that sale since it would be his main private residence.

      If however he restores the building to residential use in order to sell it then the low price he paid to buy it will mean that there is a larger profit made at the time of a sale to any other individual.
      Then your son will be liable to pay income tax on the profit.

      You make no mention as to whether your current property is registered with Land Registry, or remains unregistered if you have lived in the house for a long period of time.

      For a registered property it would be possible for a single form TP1 to be completed and signed by you so that the entire transaction between you and your son can be registered with Land Registry by paying a fee of £40.

      In the event that the price for the transfer was shown to be less than £6,000 that would mean that the entire transaction cost will be £40 as the fee to Land Registry and the only additional cost would be for an envelope and stamp to send the transfer deed and a completed application form AP1 to Land Registry.

      Both of those forms can be downloaded from the Land Registry web-site to be completed and signed.

      If for any reason you decided to show the sale price as more than £6,000 then there would need to be Identity forms provided if you wanted to deal with the transaction without employing a solicitor. Those ID forms would require someone to confirm the identities so that a fee would then be charged by that person who would normally be a local solicitor.
      Even then it is a lot less expensive than asking a solicitor to deal with the transfer on your behalf if your property is registered.

      It would require some consideration of what rights you would need to reserve over the land being transferred and what rights would be h granted to the land being transferred. This may include services laid under or over the two parts of the property that will need to be retained after the transfer.

      If that sound too complicated for you or your son, or if your property remains unregistered then it would be necessary to have the transfer dealt with by a solicitor as that would require a more extensive type of transaction based on the original deeds for your property being provided to Land Registry, which may also lead you to have your own property registered as part of the transaction.

      Your motivation for the transfer is to be applauded and I hope it does work out in the way you want it to.

      Comment


        #4
        As an afterthought to my previous posting, the land within the curtilage of a dwellinghouse, even if it is a listed building, has permitted development rights that allow hard surfaces to be created and a new means of access to a highway created.
        That would mean that certain work could be undertaken to have anew access and driveway and parking spaces created before the land is transferred and remains part of the curtilage of the original house.

        There may be some advantages to that happening as the type of surface and the extent of the additional parking spaces will not be subject to scrutiny by the local planning authority, since permitted development can be undertaken because planning permission is granted by the Government when it approved the Town and Country Planning (General Permitted Development) (England) Order 2015.
        Class F – hard surfaces incidental to the enjoyment of a dwellinghouse
        Permitted development

        F. Development consisting of—
        (a) the provision within the curtilage of a dwellinghouse of a hard surface for any purpose incidental to the enjoyment of the dwellinghouse as such; or
        (b) the replacement in whole or in part of such a surface.

        Development not permitted

        F.1 Development is not permitted by Class F if permission to use the dwellinghouse as a dwellinghouse has been granted only by virtue of Class M, N, P or Q of Part 3 of this Schedule (changes of use).

        Conditions

        F.2 Development is permitted by Class F subject to the condition that where—
        (a) the hard surface would be situated on land between a wall forming the principal elevation of the dwellinghouse and a highway, and

        (b) the area of ground covered by the hard surface, or the area of hard surface replaced, would exceed 5 square metres, either the hard surface is made of porous materials, or provision is made to direct run-off water from the hard surface to a permeable or porous area or surface within the curtilage of the dwellinghouse.
        PART 2
        Minor operations

        Class B – means of access to a highway
        Permitted development
        B. The formation, laying out and construction of a means of access to a highway which is not a trunk road or a classified road, where that access is required in connection with development permitted by any Class in this Schedule (other than by Class A of this Part).
        There may need to be a discussion with your son about whether he would want to undertake some of those tasks prior to seeking formal planning permission, or whether that is too big a risk in terms of costs if he failed to secure planning permission.

        Comment


          #5
          If you are going to split your land you may now need to have a plan done which is Land Registry Compliant.
          Aparrently solicitors can no longer draw lines on maps and submit them to the Land Registry.
          Our solicitor did that but the ordinance survey plan which the land registry use is inaccurate and we had to have the land surveyed and make an application to the Land Registry to rectify boundaries.

          Comment

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