Single dwelling or block of flats? Mortgage lenders' right to sale

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    Single dwelling or block of flats? Mortgage lenders' right to sale

    A property is made up of two flats. The lower flat is in the ground floor and the upper flat which is made up of the first and second floor.
    The freehold is at the name of first person.
    The lower flat is leased at the name of this first person and at the name of a second person and it is mortgaged with a first mortgage lender
    The upper flat is leased at the name of this first person and at the name of this second person and it is mortgaged with a second mortgage lender
    They are two 999 years leases

    I have the following two questions:

    Can this property be amalgamated into a single dwelling if we take into account that the mortgage lender of the lower flat and this of the upper flat have a right that this property remains a block of flats to sell separately the lower flat or the upper flat in case of default on payment of the mortgage?
    The main question is whether this property could be a single dwelling even though it can sold at any time as flats by the two mortgage lenders specially that no fixtures like bathroom and kitchen were removed which means that this property is ready to be sold as separate flats at any time?

    If despite not having the right to amalgamate his block of flats into a single dwelling the owner of his property has nevertheless made alterations to his property to amalgamate it into a single dwelling has he the right to claim that it is a single dwelling to get permitted development rights which are granted only to single dwellings and not to flats?

    #2
    Three separate legal points are raised.

    As for the planning law point, that is relatively straight forward.

    The building can be returned to a single dwelling without need for any planning permission, because the Town and Country Planning Act 1980 Section 55(f) would seem to apply.
    (f)in the case of buildings or other land which are used for a purpose of any class specified in an order made by the Secretary of State under this section, the use of the buildings or other land or, subject to the provisions of the order, of any part of the buildings or the other land, for any other purpose of the same class.
    As for the problem with two mortgage companies having taken separate charges over part of what would become a single dwelling, that I could not comment on, although I would have thought this will be the biggest problem to deal with should someone default on either of the loans.

    If the house was to be sold and both mortgages paid off, then in future there would be no possibility of a problem as long as the new owner had a single mortgage or bought for cash.

    The one thing not being considered is council tax payments and services.
    The two demands made on the flats will need to be cancelled with a new valuation being needed for the single dwelling to be assessed under a single council tax band.
    How the service providers get dealt with would be a further complication, presuming that there are currently separate services that could be with four or five different supply companies.

    Comment


      #3


      1.
      You say

      “The building can be returned to a single dwelling without need for any planning permission, because the Town and Country Planning Act 1980 Section 55(f) would seem to apply”

      However I think that on addition to statutory law some city councils have their own rules which say for example that they will resist an application to amalgamate a block of flats into a single dwelling if more than a certain number of residential units are lost

      2.
      You say

      “As for the problem with two mortgage companies having taken separate charges over part of what would become a single dwelling, that I could not comment on, although I would have thought this will be the biggest problem to deal with should someone default on either of the loans”

      This is the main issue and the reply could be that simply this property could not be single dwelling for this reason. I am looking for confirmation that I am right

      3.
      You say

      “The one thing not being considered is council tax payments and services”

      This raises another important issue because in order to be a single dwelling house the two council tax bands of the two flats should be cancelled and replaced by a unique council tax band for the entire property. However the question is had the Valuation Office Agency accepted to this change in Council tax band if it would have been aware that there are two leaseholds and two mortgage lenders and that a part of this property could be sold at any time as a separate flat by any of the two mortgage lenders in case of default in payment of one of the two mortgages specially that no fixture like kitchen and bathroom were removed?

      Comment

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