What is a freehold title split?
Many times, clients come to us asking for help with a complex mortgage and property ownership scenarios. One of these scenarios is splitting a freehold title.
Owning multiple properties on the same piece of land can happen for many reasons. Often property developers will buy land, obtain planning permission and move on to build properties. The problem comes when mortgaging these properties. Mortgage lenders will insist that each property they mortgage has right of access, which means when that property is rented, the tenants need the right to access the property.
What happens if you have several properties on the same title?
When you have properties on the same title, it is often more expensive to mortgage them. This is a potentially unnecessary expense which can be avoided by splitting the titles.
You will need to plan this properly. When building or splitting titles, it is worth checking with your legal and surveyor/architect team that each plot will have its own access route and rights to access services (e.g. electricity and drainage etc). This will prevent mortgage lenders declining the mortgage application after the mortgage offer. Something that is both costly and time-consuming. It will also help to avoid issues if you ever come to sell the Property.
So how do we go about splitting the titles?
There are two ways to split the Freehold title to a property. Firstly, you can apply to the Land Registry for the title to be split. This is at the Land Registry’s discretion and cannot be used if rights to need to be granted (e.g. for access or services etc.)
The second way to split a title is to do a Transfer of Part where you transfer part of the title out of the original title – thus creating a new title. As you are unable to grant rights to yourself, you would need to transfer the parcel of land to another entity – this could be to another individual, to a company or to sole/joint owners. Please note that this may incur a Stamp Duty liability as it is a disposal of land.
Talk to the experts
Given the complexity of the above, it is worth speaking to your mortgage adviser, accountants and legal team first. Once any boundary issues and necessary rights have been identified, a solution can be provided before any mortgage application is submitted.
This will prevent you from losing fees and wasting time on a mortgage application which will never be able to complete.
While it may go without saying, having a legal adviser or conveyancer will really help with the complexities of this. We have seen a client go through the process without a legal adviser and they were unable to complete. We suspect that if there was legal advice early in the process the mortgage would have gone through without too many issues.’
If you have any questions, please contact OCG Mortgages on enquires@ocgmortgages.co.uk at or OCG Legal and we can advise you on the best course of action.
