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  • Refurbish/Develop

    Property conversion

    I have previously split properties into Flats (as I am sure many others have). I understand that some people have the strategy of splitting the titles and some do not.

     

    Can I ask what others have done and why?

     

    Richard

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    Hi Richard,

     

    Thanks for getting back to me. I have so far chosen to remain on one title (appart from one wich was sold).

     

    However I have understood that some people split the title to refinance, just wondered who has done this and to what advantage.

     

    Richard

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    The way i've done it is to target properties on one freehold, then split the lease, then refinance the units individually.

     

    When buying in its cash or bridge, then refurb and split, then refinance on commercial facility.  As Richard G says, if you don't need to its as well to keep it on one title. 

     

    But for me, it allows me to get off the bridging finance completely (without waiting 6 months on expensive rates), and pull back my deposit and refurb budget (normally borrowed from an investor). I get it all out because i (a) buy cheap (b) add value through the splitting and © add value through refurb. 

     

    The second reason is then the individual units are easier to sell on to investors, using BTL finance, as its harder to get finance for a converted property on one title.

     

    I target properties that have historic use as flats, so i just need to 'regularise' if at all, not old houses with me needing to get planning permission.  The reason being, the exit to investors, if i am converting then they are classed as newbuild and the finance is restricted or lower LTVs and more scrutiny.  Think thats changing now though.

     

    Having read all that it sounds like i'm doing loads of these, truth is i've only done a few but its something i am concentrating on at the moment.

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    If you need finance then it's crucial to find out the lender requirements first.
    Paragon for example (preferred lender for many investors with multi unit properties) will want them all on one title.
    Commercial lenders don't usually mind either way.
    Buy to let lenders they'll need to be leasehold but getting more than one mortgaged is going to be difficult; BM and Woolwich are options subject to various criteria.
    Remember if you are looking to sell any on you'll need the leases to be set up for at least 6 months, similarly if you refinance them individually.
    Lisa
    https://www.keys-mortgages.com
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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    Lisa,   I'm a bit confused.com   Are you saying that even if you bought with cash then split the title you would need to wait 6 months to get the properties onto mortgages? Maybe I've misunderstood but that seems to conflict with Arlo's strategy and my one-time experience of splitting the title immediately on purchase.
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    Yes Ken; if you're looking to use a buy to let mortgage (or indeed sell to a resi buyer) on a newly converted flat the lease must have been in place for 6 months. 
    Lisa
    https://www.keys-mortgages.com

    Ken E said:

    Lisa,

     

    I'm a bit confused.com

     

    Are you saying that even if you bought with cash then split the title you would need to wait 6 months to get the properties onto mortgages? Maybe I've misunderstood but that seems to conflict with Arlo's strategy and my one-time experience of splitting the title immediately on purchase.

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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    PS Arlo said he used a commercial facility; commercial lenders won't have this requirement usually.
    Lisa
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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    Lisa,   I'm still a bit confused, partly as this is something I have done once and maybe doing again in the next couple of weeks.   One year ago I bought a property on single title. It had been physically split some years before that into two flats. At the moment of completion, the freehold was split and each flat became a leasehold. Both were mortgaged from the point of completion, which was the same point at which the lease started. There was never any mention of needing the lease for 6 months from either lender.   From my way of thinking that means 2 BTL mortgages were given on 2 new leases. Am I misunderstanding something here?   The possible purchase in the pipeline is similar except that I would be working with another investor and the initial purchase would be as cashbuyer.
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    Hi Ken,

     

    each lender has different criteria and it changes too so it’s important to check. But I can say with certainty that most buy to let lenders I have spoken to with new flat conversions will insist upon the lease having been registered for 6 months.

     

    For example I did one with BM last year where client purchased a house converted to two flats that had leases put in place at time of purchase and they were fine but with another client they insisted upon 6 months!

     

    Lisa

     

     

     

     

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    Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com

    Hi Lisa,   Thanks for replying. Still confused but that may be because lenders seem to make it up as they go along! If I go forward with this purchase I will let you know how it goes with the lenders and new leases.   Ken
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