Leasehold Land

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  • #22583
    Anonymous
    Guest

    😯 Can anyone give me some advice regarding a couple who have sold their home to their son & daughter-in-law, spent all the proceeds & are now renting another property. I am looking at the deprivation of capital aspect but have just requested a land registry which shows the couple are the leaseholders (999 years) for the property they previously owned. Can anyone advice whether this will have any affect on their new claim i.e., will I just look at the annual lease charge or is it possible to have the land valued & if so would it be worth anything. I know you can buy the freehold from the leaseholder so would this be the information I need to obtain? Any help would be much appreciated.

    #8694
    Anonymous
    Guest

    Your couple own the leasehold of that property. This seems to be quite a strange thing to do – I would imagine they are trying to avoid capital gains tax.

    You will need to have the leasehold valued (as you would if it was a freehold property) and calculate the capital value by subtracting any encumberances (mortgages) and disregarding 10% of the residual value.

    The market value on a 999 year lease will be substantial – very probably equivalent to the value of a freehold property.

    #8695
    Anonymous
    Guest

    Thanks for your help. I’ll request a valuation as suggested.

    #8696
    petedavies
    Participant

    It sounds as if your claimant has sold an underlease – i.e. a lease for any period up to the remainder of their lease.

    If this is the case, all you will be valuing is their reversionary interest and the right to receive any annual rental income reserved on it. Unless the lease they have sold is for a fairly short period of time the interest will not have much value.

    #8697
    Anonymous
    Guest

    I might have missed something, but LStringer appears to be saying that they have sold the freehold to their son and retained a 999 year leasehold interest in the property.

    It would be the son as freeholder who holds the reversionary interest in the property and has the right to receive any annual rental income on the property.

    The claimant seems to have a substantial long lease on the property.

    #8698
    petedavies
    Participant

    That was what I thought at first but… a 999 year lease would have almost the same value as a freehold.

    I cannot see how there would be any real value for them to have spent.

    #8699
    Anonymous
    Guest

    Well call me cynical, but could this not been an attempt to avoid inheritance tax or to reduce their capital so as to be entitled to HB?

    #8700
    petedavies
    Participant

    What, somebody manipulate their finances to take advantage of tax/benefit schemes? Only when Wales win the RWC, the LLanelli Scarlets sail through Europe and Swansea win the FA Cup!

    Seriously, yes I suspect it is but any deprivation is from the disposal of the proceeds of any sale, from the situation described I can see no likelihood of the claimant possessing any real capital in the property.

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