Wanting to split title deeds

Advice_Seeking_User

Hi, 

We have a smallholding of farm + yard + a couple of fields >10 acres.  I want to split the title to hold the farm, yard and outbuildings in one and the fields in the other, this is so we can approach the whole mortgage market to remortgage, rather than just the limited number that deal with over 10 acres.  the Equity in the property will easily pay off the land, and give good % ownership of the farm when remortgaged.  we want to keep both split parts of the deeds - is this allowed? can my current mortgage lenders block this? if possible, how do I go about this? note we are past our term with our current mortgage lenders.

Thanks

user1977

Your current lender can't "block" anything if you're paying them off completely (which is what happens with a remortgage).

I think there is difficulty in splitting title deeds unless you're transferring to a different party. Lenders may also have difficulty with you owning the neighbouring property (because it becomes more likely that there'll be a problem with one property depending on the other in some way, and they end up only being able to repossess a useless portion of the property).

Advice_Seeking_User

Sorry, I should clarify - we do not have another mortgage in place yet - we want to split the title so the land is 100% ours and then only mortgage the farm with yard and about 1 acre, and its own access - the fields also have their own access. (this is 3/4 the total value of the whole package, and we have aprox 65% equity) so future mortgage would be against the most valuable parts of the current deeds. but at present we can not got to the whole market to find a mortgage as standard high street lenders do not lend on a property with more than 10 acres - hence wanting to split.

thanks

TBagpuss

I think you will need your current lenders consent and I suspect that technically you would probably then need to remortgage / port your current mortgage to still have security over both parts. 
Talk to a solicitor (a real solicitor, not just a conveyancing firm) about how and what order to do things in - you probably want to end up with the split and the remortgage taking pklace at the same time but how exactly you achieve that will need some expert advice. 

user1977

TBagpuss said:

I think you will need your current lenders consent and I suspect that technically you would probably then need to remortgage / port your current mortgage to still have security over both parts. 
Talk to a solicitor (a real solicitor, not just a conveyancing firm) about how and what order to do things in - you probably want to end up with the split and the remortgage taking pklace at the same time but how exactly you achieve that will need some expert advice. 

It's still not particularly clear, but I think the OP is proposing to redeem the current mortgage rather than retain it at all.

SDLT_Geek

Advice_Seeking_User said:

Hi, 

We have a smallholding of farm + yard + a couple of fields >10 acres.  I want to split the title to hold the farm, yard and outbuildings in one and the fields in the other, this is so we can approach the whole mortgage market to remortgage, rather than just the limited number that deal with over 10 acres.  the Equity in the property will easily pay off the land, and give good % ownership of the farm when remortgaged.  we want to keep both split parts of the deeds - is this allowed? can my current mortgage lenders block this? if possible, how do I go about this? note we are past our term with our current mortgage lenders.

Thanks

Perhaps your question is confusing people.  Is the scenario this:

(a)  The smallholding is jointly owned between you and others?
(b)  It is not currently mortgaged?
(c)  You wish to partition the ownership between the joint owners?
(d)  You hope that way to end up with full ownership of part of the property which you can mortgage?

Edit: I am clearly way off the mark here!

stuhse

My mortgages have always been with the the Furness building society- through 5 houses to the current one which is a small holding with just over ten acres as you describe.  Through over 30 years of house ownership i found them competitive and good to deal with. I recently paid my mortgage off , but i believe they continue to be competitive and are used to dealing with rural properties- might be worth a try if plan A proves too tricky ?

eddddy

Advice_Seeking_User said:

Sorry, I should clarify - we do not have another mortgage in place yet - we want to split the title so the land is 100% ours and then only mortgage the farm with yard and about 1 acre, and its own access - the fields also have their own access. (this is 3/4 the total value of the whole package, and we have aprox 65% equity) so future mortgage would be against the most valuable parts of the current deeds. but at present we can not got to the whole market to find a mortgage as standard high street lenders do not lend on a property with more than 10 acres - hence wanting to split.

thanks

For this to work, you would have to do everything at once.

i.e. The situation today is...

• You have one land title
• You have a mortgage against that title

So all in one day (technically at the same moment), you would have to do the following...

• Pay off your current mortgage
• Split the land title into 2 titles
• Take out a mortgage on one of those titles

In theory, that's not a problem. Solicitors deal with that kind of stuff all the time. Obviously, you'd need to have your new mortgage arranged before the day.


But the problems you might hit are:

• Land Registry might not let you split 1 title into 2 titles - unless you are selling/transferring one of those titles

• Your new mortgage lender might not be happy about you owning a neighbouring property

It might (or might not) be easier, if for example, when you create 2 titles - you leave one registered to yourself, and one transferred to your spouse (or a company you create). That might satisfy Land Registry, but your new mortgage lender might still not be happy.

Advice_Seeking_User

@eddddy - exactly, 100% correct in what I want to do. why would new lender be unhappy?  its just a bunch of fields, and both farm and fields have seperate access and I would be splitting along the current field boundarys - no shared servicesbetween the two.  Also, fields would be owned outright, and I would have min 40% equity in farm.  

Many thanks for your comments - most enlightening

eddddy

Advice_Seeking_User said:

@eddddy - exactly, 100% correct in what I want to do. why would new lender be unhappy?  its just a bunch of fields, and both farm and fields have seperate access and I would be splitting along the current field boundarys - no shared servicesbetween the two.  Also, fields would be owned outright, and I would have min 40% equity in farm.  

Many thanks for your comments - most enlightening

My understanding is as follows...


As you've found - many mortgage lenders don't like to lend on properties with a lot of land which could be potentially used for agriculture/farming.

It's because if you sneakily let the property for agricultural use (without the bank's consent), and then you don't pay your mortgage, and the bank needs to repossess - they can't evict an agricultural tenant. (Whereas the bank could evict a non-agricultural tenant.)


And splitting the title won't stop that risk.


You could still let the buildings and fields (as a single bundle) to an agricultural tenant, even though they are on 2 separate titles. So the bank would have the same problem with evicting the agricultural tenant.