Splitting a freehold title: What is it and why do it?
Splitting the title of a freehold property is becoming increasingly common.
What is title splitting?
As the name suggests, title splitting is where you split/divide the legal title of the freehold property into separate parts. The aim is usually to increase the value of the property as a whole. The application for the split is made to the Land Registry. Once granted, the new part is taken out of the original title and becomes a completely new title.
Reasons for splitting the title
There could be various reasons for wishing to split the title of the freehold property. Property owners may be looking at their existing assets to see how they can maximise their value. For example:
- You choose to separate a portion of your garden or land to create a separate development plot.
- As the owner of a large house, you may wish to divide the property into individual flats, each with their own leasehold title.
- Or you may wish to split the freehold title of a block of flats so that each flat may be sold independently. Or maybe you are looking to raise finance by selling off one flat so you can upgrade the other flats.
Important considerations for a title split
When considering splitting a title, there are fundamental considerations that include:
- Have you sought advice from a solicitor experienced in dealing with title splits? It is a complex process and one that requires expert advice.
- What are the planning permission or restrictions? Are there any restrictive covenants for example that would prevent the title split?
- Do you have an existing mortgage on the property in question? If so, you will require formal consent before you can proceed.
- Who are the parties involved in the split? You cannot name yourself on both parts. You cannot be both the freeholder and the leaseholder.
- How will the deal be structured and what are the tax implications of potential options?
- Will there be any Stamp Duty Land Tax (SDLT) or Capital Gains Tax (CGT) payable? Your lawyer can advise on SDLT & CGT implications.
- Are the new titles created in such a way that will be valuable and mortgageable by a lender?
- If you are refinancing, can the split happen simultaneously with the refinancing or does the split need to take place first?
- Are your plans Land Registry compliant? You don’t want to be dealing with title defects in the future.
For more information and advice on embarking on a tile split, contact one of Bird & Lovibond’s specialist team of property lawyers: