Splitting house deeds

Sam_W_5

We've got an unusual house.  What currently looks like a single property is in fact two, each with their own electrical and water connections, and two lots of council tax to pay. They're currently on one set of deeds (with two titles) and linked by an internal door.  Our time to remortgage is coming up and we've built up enough equity that we should be able to formally split them, retain one without a mortgage which we would use as accommodation for friends/family and get a residential mortgage for the side we live in.   Doing this would mean bricking up the internal door, but that's not a problem for us, currently has a bookcase across it anyway.
Advantages to us would be:

• Easier to sort house insurance - we currently have limited options so annual cost is higher
• Potential to holiday let the now-mortgage free property - no need for permission from lender
• Relatively easy access to cash in future, could take out buy-to-let mortgage if needed at some point
• Gets things tidied in case we want to sell one half or the other at some point in the future

The only disadvantage I can see is some short term hassle with land registry paperwork and locating new mortgage, and a potential problem in the future if we wanted to sell both halves to one buyer as they wouldn't be able to do it all on one mortgage.

Question for forum users - am I missing anything that means this plan is a bad idea?
 

macman

Separate utility connections does not make it two properties. Might be classified as an annexe? Does each property have it's own independent access to the street?

user1977

Is there any planning issue with the properties being used (and owned) completely independently?

Sam_W_5

Thanks for the comments.
The house is Victorian, the part we live in was always a house, the other half was commercial until the 1970s, when planning permission was granted for conversion to a separate house, not an annexe.  Originally they were not linked internally, this was a later modification by the people we bought both halves from.  They do each have independent access to the street.  

AdrianC

"One set of deeds with two titles"?

Sam_W_5

>"One set of deeds with two titles"?
That's my understanding.  They are 2 separate houses, but are both shown on a single record (where they are named individually).  Not my area of expertise, but discussions with solicitor during purchase was that they could be split at a later date.

AdrianC

So just a single title...

"Deeds" are the old piece of paper version of what is now a LR title.

TBagpuss

• Council Tax - if it's currently classed as a single property then presumably you'd end up with 2 council tax bills.

• As the new separate property won't be your primary home, you will have a potential CGT liability when you sell - based on the gain (If any) in value between the point when you acquire it and the point you dispose of it. You'd need to take advice about whether you would be classed as acquiring it at the point you slit the property, or if you would have a more complex calculation based on the proportion of the whole property from when you originally bought, with a reduction for the time it was part of your main home. 
• A certain about of hassle in managing the timings to split the title and brick yo the door and get a new mortgage valuation.

Sam_W_5

> As the new separate property won't be your primary home, you will have a potential CGT liability when you sell - based on the gain (If any) in value between the point when you acquire it and the point you dispose of it. 

This is a good point, but I think it may already be the case.  When we bought the house(s) it went through as 2 transactions for stamp duty i.e .we paid two separate amounts of stamp duty.  Does this means a transaction value for each house was established at the time, and we could be liable for CGT on difference in value at the point of a future sale?