Considering buying block of 3 flats - advice?

[Ericthelobster]

I'm interested in buying a property, which is a 1930s(?) building converted into three flats; two 1 bedders and one 2-bed. I'm happy that the yield/rent/cost sums work out OK, but given that my other few properties are 'conventional' stand-alone terraced houses, this is a whole new ballgame for me, and I'm wondering what other considerations I should be worrying about.

The place was evidently converted a few years ago and has been rented out since, and I clearly need to satisfy myself that the conversion has all been done legally and properly, and fire-regs have been adhered to etc.

It's on two floors, and all three flats open on to a communal stairwell. I'd be letting each flat independently to individuals, ie not as HMOs.

The flats are actually up for sale individually, so they are completely separate entities (ie there can be no issue of the whole building being classed as HMO can there??)

If I go for this, I certainly intend to get a structural survey done (as well as the building society valuation), and presumably I can check on adherence to building regs and planning permission through the council.

Can anybody offer any advice on any potential 'gotchas' or issues here? Anybody else I should consult? As I say, I'm happy about the financial side (provided I can get it for the price I have in mind).

Thanks a lot!

[dazalock]

Hi

I was considering exact same thing earlier this year. The good thing with this is you wont have the maintenance charges of a flat in a block, i.e. you manage the block yourself so no management company, but you will of course need to consider all the insurance and building maintenance, cleaning and gardening issues.

One thing here, if you buy all at the same time on the same date the stamp duty will be considered on the price of the lot, so not only will you go over the 120k threshold and get charged stamp, you may well go over the 250k or even 500k thresholds and paying upto 3% on all.

Good luck, would be interested how you get on with this.

[Ericthelobster]

Yes I'd wondered about the stamp duty thing, I daresay it would be possible to buy the flats separately somehow (all well below 120K each) and avoid that, but I'm sure the extra costs in defining 3 separate transactions/dwellings would more than exceed the saving.

Purchase price would certainly be below the 250K threshold, anyway.

[P.Pilcher]

Remember the 1st. law of taxmen: heads we win, tails you loose!
Although it is possible to minimise/eliminate stamp duty liability by buying each flat separately, unless you're very careful the taxman will almost certainly rule that the successive purchases of three separate flats making up a complete block forms a "connected purchase", hence the purchase prices will be added together and stamp duty levied on the total.

P.P.

[dazalock]

Not sure about that, think a rule is a rule, check the thread. http://www.landlordzone.co.uk/forums/showthread.php?t=194

Anyways, eric was saying is probably valid, the cost of seperate purchases in terms of solicitors fees, searches and the likes may negate the savings.

[Ericthelobster]

Thanks for the comments... I'm not too fussed about the stamp duty thing at all though, it's other things like fire regs and HMO issues I'm more concerned about!

I've now been into the council offices and checked the original conversion/change of use was definitely done with planning permission / building regs approval; no problem there, great.

I also went into Environmental Health to find out whether the property had been registered as an HMO, and if not, whether it should be. I was advised no, not necessary, because it consists of completely self-contained homes; but the bloke said the 'shared area' (ie the communal stairway) should comply with HMO rules and I'd best get the Fire Safety Officer (ie from the Fire Brigade) out to check that. Sounds good news... does it all seem plausible/OK to the experts here? I realise all this (HMOs etc) is very much dependent on individual LAs, and having nothing in writing from them, I feel a bit vulnerable while on the point of shelling out a large amount of dosh.

While chatting to the Environmental Health guy, he mentioned in passing that of course I'd need Landlord's Gas Certificates doing (which I know, obviously), as well as getting electrical inspections carried out - now, to my knowledge, that's bull (isn't it??). Just makes me wonder how clued up the fellow was...

Thanks for any comments

[lawstudent]

Whatever your LA knows/thinks, I believe that this kind of building will probably be an HMO if it fails to meet the standards of the Building Regulations 1991 ... and you may be required to be licensed when the new regulations are implemented in about October this year. There is no requirement on LLs to have electrical inspections done, although since you may be liable for injury caused by any defect it is a good idea.

More info on:

http://www.odpm.gov.uk/stellent/groups/odpm_housing/documents/divisionhomepage/036728.hcsp

[Ericthelobster]

Thanks, that link's quite reassuring to my scenario actually. It doesn't look as if it will count as an HMO even under the new proposals.

Rang the Fire Safety Officer who wasn't in the slightest bit interested in the property - said it was the council's responsibility and as a private building and not HMO, he wouldn't even look at the place; they don't have the resources to do so.

I ascertained that the conversion was definitely done with building regs approval in 1995; so, good news that it's post-1991 then.

So far, can't find any reason not to go ahead this!

[lawstudent]

yes, eric - it's looking good - congratulations and well done for checking these aspects out before going ahead - the whole thing's a minefield for the unwary!