Buying property with two titles

Just_Some_Boy

Hello,

Any help/advice would be greatly appreciated. 

Me and my partner are looking at buying a ‘house’ that is currently split into two flats, each with its own title. The vendor is not prepared to merge the titles back to one so if we want it we have to buy them separately. We’ve asked a standard broker who said it’s not possible to purchase it as separate titles, but we just wanted to check this and see if anyone has any experience of doing anything similar? 

One option we would have would be to buy a title each, separately through different lenders. It would be complicated but would it be a way around? And lastly, when sales like this take place how do the sellers decide how to price each title? Do they just split the total price it’s listed at down the middle? Or does each flat have its own value, decided by either the agent or the valuer?

Thank you in advance for any help and advice anyone may have! 

user1977

1. It's quite commonplace for properties to be spread over more than one title (e.g. one for house and one for an extra bit of garden). No idea why the broker thinks that's a problem.
2. No, the lenders are not going to let you buy under separate mortgages, otherwise they'd be risking trying to repossess half a house. You get one mortgage, possibly via a more competent broker. There's no "apportionment" of the price.

The main problem you currently have isn't to do with the title, it's the practical issue of the property being two flats. You won't be able to buy under a normal residential mortgage until the flats have been made into something which physically resembles a single house (one kitchen, etc). That's for the vendor to do, unless you were wanting to take it on as a project under development financing.

trakky14

Our house used to be two cottages, was knocked through 30 plus years ago. We have 2 titles for it, no issues at all. Slightly different to your situation though. 

canaldumidi

Are the two titles leasehold? In which case presumably there is also a 3rd, freehold, title? You'll need all 3.

In theory there's no issue with buying 2 (or 3) titles. SDLT would be liable on the total of all 3 'connected' puchases. If you were buying for cash - no problem.

The issue is if you need a mortgage. Few (no?) lenders will lend on 2 properties due to the issues of repossession. Plus of course only one would be deemed your 'residence', making the other a 2nd home or BTL.

Buying with a development mortgage (which costsmore) may be possible, and then once the properties are physically joined as one you could switch to a residential mortgage.

The seller willfind this issue with most buyers (except cash buyers or developers).

Try speaking to another (better) broker.

Just_Some_Boy

canaldumidi said:

Are the two titles leasehold? In which case presumably there is also a 3rd, freehold, title? You'll need all 3.

In theory there's no issue with buying 2 (or 3) titles. SDLT would be liable on the total of all 3 'connected' puchases. If you were buying for cash - no problem.

The issue is if you need a mortgage. Few (no?) lenders will lend on 2 properties due to the issues of repossession. Plus of course only one would be deemed your 'residence', making the other a 2nd home or BTL.

Buying with a development mortgage (which costsmore) may be possible, and then once the properties are physically joined as one you could switch to a residential mortgage.

The seller willfind this issue with most buyers (except cash buyers or developers).

Try speaking to another (better) broker.

Thank you. Only one title is online, that's the lease for the flat which was created when it was converted a few years back. The EA said the purchase is for the house, and then a leasehold for the flat. They suggested it wasn't done how you'd normally split a building like this because it was just used by family. 

We were wondering if it would be an option to buy the leasehold property in cash, then a residential mortgage for the house? 

user1977

Just_Some_Boy said:

canaldumidi said:

Are the two titles leasehold? In which case presumably there is also a 3rd, freehold, title? You'll need all 3.

In theory there's no issue with buying 2 (or 3) titles. SDLT would be liable on the total of all 3 'connected' puchases. If you were buying for cash - no problem.

The issue is if you need a mortgage. Few (no?) lenders will lend on 2 properties due to the issues of repossession. Plus of course only one would be deemed your 'residence', making the other a 2nd home or BTL.

Buying with a development mortgage (which costsmore) may be possible, and then once the properties are physically joined as one you could switch to a residential mortgage.

The seller willfind this issue with most buyers (except cash buyers or developers).

Try speaking to another (better) broker.

We were wondering if it would be an option to buy the leasehold property in cash, then a residential mortgage for the house? 

How would that help? You'd still need to have converted the whole thing into one house before lenders will accept it.

canaldumidi

Just_Some_Boy said:

canaldumidi said:

Are the two titles leasehold? In which case presumably there is also a 3rd, freehold, title? You'll need all 3.

In theory there's no issue with buying 2 (or 3) titles. SDLT would be liable on the total of all 3 'connected' puchases. If you were buying for cash - no problem.

The issue is if you need a mortgage. Few (no?) lenders will lend on 2 properties due to the issues of repossession. Plus of course only one would be deemed your 'residence', making the other a 2nd home or BTL.

Buying with a development mortgage (which costsmore) may be possible, and then once the properties are physically joined as one you could switch to a residential mortgage.

The seller willfind this issue with most buyers (except cash buyers or developers).

Try speaking to another (better) broker.

....The EA said the purchase is for the house, and then a leasehold for the flat. They suggested it wasn't done how you'd normally split a building like this because it was just used by family. 

We were wondering if it would be an option to buy the leasehold property in cash, then a residential mortgage for the house? 

 So yes, a freehold for the building (house) and a leasehold for the flat. Plus a lease for the other flat. So there will be 3 titles in total.

You won't get a residential mortgage for the freehold (building/house) since that is an investment. As 'freeholder' you have no right to live there since the 2 flats are both subject to leases. Only the leaseholders have a right to live there (at least for the next 99 whatever years).

SDLT_Geek

Just_Some_Boy said:

Hello,

Any help/advice would be greatly appreciated. 

Me and my partner are looking at buying a ‘house’ that is currently split into two flats, each with its own title. The vendor is not prepared to merge the titles back to one so if we want it we have to buy them separately. We’ve asked a standard broker who said it’s not possible to purchase it as separate titles, but we just wanted to check this and see if anyone has any experience of doing anything similar? 

One option we would have would be to buy a title each, separately through different lenders. It would be complicated but would it be a way around? And lastly, when sales like this take place how do the sellers decide how to price each title? Do they just split the total price it’s listed at down the middle? Or does each flat have its own value, decided by either the agent or the valuer?

Thank you in advance for any help and advice anyone may have! 

There is a problem with stamp duty land tax here (assuming you are buying in England).  At the point of completion it seems you are buying two dwellings.  It is therefore likely that the 3% extra SDLT for dwellings will apply.  Multiple dwellings relief will not be of much help either, given that you plan to convert the building to a single dwelling.

theoretica

How thoroughly split are they, and how equal in size?  People do manage to buy properties with granny annexes and return both parts to the use of one household - I wonder if this might be a helpful analogy for discussion of what you are trying to do.

justwhat

Scotland - In Scotland titles are seamlessly merge and split all the time.  This purchase would be merged into one title and a single mortgage would be  applied for. Title would be registered during purchase(not before).

i would think England would be the same , but leasehold issue may cloud things.

If the property is reverting back to the original house title with no leasehold then there should not be an issue. (i make the assumption that the flat and the lease is owned by one owner)

loubel

 Assuming you're being sold both freehold and leasehold then you just apply to merge them on completion and you'll be left with one freehold title.

Surely it's the fact that there will still be two properties that will make it harder to mortgage though? If you are converting from two to one then I'd have thought you'd need development or bridging finance while you do the work and then remortgage as a house once you're done.

As SDLT_Geek says though, buying two properties could mean extra SDLT so you're going to need some specialist advice on the whole plan before proceeding as there's a lot to consider.