Splitting a Property Title
Why Split a Title?
There are many reasons why people decide to split the title of freehold property. Some of the most common include splitting land for potential development purposes, dividing a house into a series of flats, or even separating a garden area for sale. In some instances the process can result in an overall increase in the value of the constituent parts.
Vertical Title Split or Horizontal Split?
A vertical title split involves separating a property along the ground. This approach might be used for separating a plot to build several houses. This is a common practice for building several new properties on a parcel of land. Each unit then typically results in a new freehold title.
Horizontal split is often used for dividing a property into a series of flats that are normally then established as leasehold properties.
Planning Considerations in a Title Split
Splitting a title vertically or horizontally typically requires planning approval. People seeking to embark on a title split may want to seek advice from a planning consultant in advance. There are host of matters that planners will take into account when considering an application, ranging from the impact on the local area through to issues such as parking and traffic.
Practical Considerations in a Title Split
There are many practicalities to be taken into account when considering a title split. These include the supply and metering of utilities, any shared areas such as gardens or common entrance areas, building regulations and certification.
Tax Implications in a Title Split
Splitting a property can have several tax implications, primarily involving Stamp Duty Land Tax (SDLT) and Capital Gains Tax (CGT). SDLT may be due when a new title is created, particularly if it results in a new dwelling being created for sale or rent. CGT can be triggered when selling or transferring portions of a property after the title split, especially if the property has increased in value since its initial purchase. SDLT and CGT will of course be subject to the current rates at the time and also subject to any applicable reliefs that may be available to you.
Legal Support for Title Splitting
Splitting a title is a specialist area of the law and it is important to take early advice from a solicitor with experience of title splitting.
At Bird and Lovibond we can guide you through the process to include obtaining the Land Registry compliant plans and preparing the relevant legal documents such as the form of transfer and/or leases with defined rights and obligations and subsequent registration at HM Land Registry including the payment of any SDLT.
Please contact us to discuss your specific title split needs.
T: 01895 256151