21 Apr Add value and increase profits by title splitting
Splitting title deeds is a great way to make the most of your property assets and increase your portfolio.
Title splits come in many different forms, but the most common is to buy a single property or plot and then divide it up. If you can refurbish your property to the extent that it can be split into two or more homes, you can significantly increase your rental yields.
In some cases, you could take a plot of land and build two or more houses or take a single home and turn it into two or more dwellings. As a result, you can sell off one or all of the units or choose to retain one or more for letting.
You will need to record each separate residence with the Land Registry.
Converting houses into flats
A popular type of title split is to convert houses into flats. You will need to research the cost of building work and ensure the value of the completed flats will make it worthwhile. Some property investors use this strategy to develop a house, which can then be sold for profit once it has been converted into separate leases for each of the flats. Alternatively, once you’ve split the property, it’s possible to get buy-to-let mortgage finance on the individual flats.
Retaining the freehold
You will need to consult with a solicitor on the legal aspects of title splitting. In the case of dividing a house into flats, a common scenario would be for the property investor to retain the freehold of the building and grant leases for each residential unit.
As the freeholder, you would be responsible for rent collection, and you would also have to act as a management company, charging for maintenance and repairs, unless you appoint an agent to handle this for you. You would also be liable for maintenance and repair of communal areas such as hallways and staircases, the building’s exterior and building’s insurance.
Looking for potential title split properties
If you think you’ve found a suitable property, do your research and speak to local council and planning officers.
You should also talk to a surveyor and prepare an application for building work, to make sure your information and figures stack up. When it comes to the legal side of things, look for a solicitor who already has experience of title splits.
There are plenty of potential title split investments out there; it’s just a question of seeking the right opportunities. Trawl websites to see what you can come up with in your chosen area – there could be a plot of land ripe for development or a property large enough to be divided.
Once you’ve got multiple title deeds in place, it becomes easier to sell off one of the properties as a single unit. This is a handy strategy when you need cash upfront to invest in a new property deal.
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