Will anybody lend on Freehold Flats?

Rcraigs

I have a 3 storey 2bed semi which has a large annex to the back of the house.

The property needs complete renovation. My intentions are to bring it back to habitable standards and rent.

The basement consists of two rooms which could be knocked through to the annex to create either a studio or 1bed flat.

My question is once the house is complete I would like to remort with halifax at 90%ltv with agents predicting the house being worth 250k and my mortgage is 205k I think i can potentially pull out 20k?

I would then like to start works on the flat (no planning permission). If i decide to sell the two units seperately at a later stage will I come unstuck?

Is it possible to gain a freehold mortgage on the flat seperate to the house?

Any advice would be much appreciated.

minimike2

I normally use Woolwich or RBS for freehold flats. Halifax wont lend on them IIRC.

I would also take the agents value with a pinch of salt. It wont be worth that. You need an appraisal by a chartered surveyor (who has an unbiased opinion).

TBH your plan is crazy without applying for planning permission.

Rcraigs

Can you elaborate?

minimike2

On what part? If you mean the part about not doign work until you have planning permission I think its pretty obvious. If you do work which the planners object to, they will make you un-do that work, or re-do it to thier requirements. What a waste of money that would be.....and time.....It sound like major work that you are doing. You need to ensure full plans, building regs and planning permission are in place before you so much as lift a hammer. Its suicide not to plan something like that properly.

Conrad

Freehold flats are always problematic to mortgage, but if you are well priced you ought to find a buyer. You need to consider access issues. Lenders worry you could fall out with future owners and then make life difficult, for example access accross your land which in turn affects value in the event of a repossession.

I would also get the permission of Halifax before making any major changes as they own the property with you so they have every right to know about any major alterations prior to the event.

Best of luck

EdInvestor

Rcraigs wrote: »

If i decide to sell the two units seperately at a later stage will I come unstuck?Is it possible to gain a freehold mortgage on the flat seperate to the house?

It would be more sensible to create a long leasehold on the flat and sell that.You need proper advice from a surveyor and a soliticor about this scheme which has many pitfalls and will likely cost a lot more than you think..