Here’s an Interesting Question About Title Splitting – But it’s Not What you Think

Here’s another great question from my Telephone Consultation Service. This time it’s regarding Title Splitting, although there is a bit of a twist to this one, so, many thanks to Keith for an excellent question;

“Hi Bernie.  I wondered if I can do title splitting on a property where the owner doesn’t own the freehold. I’m asking because I’m looking at a property in Tottenham where planning is in place for a 2 room + bathroom conversion in the loft. I want to make it a self contained 2 bed flat so there are 2 x two bed flats. Haringey council own the freehold and there is a council tenant on the ground floor. The vendor occupies the first floor and has planning for the second floor loft space.  Can you advise as I wanted to purchase and split the title?  Best Wishes.  Keith”

Now, the conventional thinkers out there may be thinking “No. You can’t do freehold to leasehold title splitting if you don’t own the freehold. Move on.”  Well, that’s quite true.  But, in theory, there’s nothing to stop you taking an existing leasehold title and splitting it into two separate parts.

BUT … and this is a BIG BUT … as leaseholder of a property remember, you don’t own the property. It is not your building and you can’t go knocking holes in it, adding bathrooms, putting new stairs up to the loft, and the other things you want to do here. The leaseholder is only renting the property – admittedly for a very long time – but still only renting.

So what do you do?

The starting point, as always, is R T B L.  Read the bloody lease.  You need to establish in the first instance whether the existing first floor lease includes the loft space. In all likelihood it doesn’t. The flat probably stops at the ceiling and everything above that belongs to the landlord. In which case, you’re proposing spending £000s on somebody else’s property.

But let’s assume for the sake of this article, the lease does include use of the loft space. What then?  Well, it’s still not possible to go full steam ahead and carry out your conversion works. If you carry on reading the lease, you’ll see it says the leaseholder must not alter the property in any way. Cutting a hole in the ceiling and fitting a staircase IS altering the property – significantly. So is cutting holes in the roof and fitting Velux windows.  If you do that, the freeholder will claim you’re in breach of the terms of your lease and they’ll commence legal proceedings for forfeiture.

So, is  this project is a non-starter?

Not necessarily.

Assuming the numbers stack up – what you need to do is approach the freeholder, negotiate and agree a “Deed of Variation”. You want to extend the demise of the flat from just the first floor to include the second floor too.

You’ll also need to agree with the freeholder a “Licence to Alter” … which will allow you to change the structure of the building from its present configuration to the new two flat format.

Now I’m sure the freeholder will agree to signing those documents – provided you pay them to do so. Exactly what price they come up with, will depend upon the ‘value’ of the loft space and the development profit you’re likely to make. Those numbers will differ from property to property and area to area, but it won’t be a few hundred pounds.  I recently agreed similar documents in Twickenham at just over £139,000!!!  (But Twickenham is a bit more expensive than Tottenham.)

So Keith, pay the council the £000s you agree and away you go. Get your crack team of Polish builders to do the work and you’ll make a handsome profit at the end of the project … just in time for the neighbours to claim £000s in damages because their adjoining flats are cracking because of your building works!

So having paid the council their money, you then need to have a structural surveyor inspect every adjoining flat/house  (below, left and right) to record the condition of those properties. A “Party Wall Award” will need to be agreed with every owner of every neighbouring property (freehold and leasehold) before you begin works.  That way in a year’s time when they claim “there’s a crack” you’ll have documentary evidence to prove the crack was there long before you arrived on the scene – or not, as the case may be.

Life’s not simple Keith. Especially in the world of leasehold.

Good luck.”

The message here is that, whatever you want to do, there’s almost always a way to do it. The important part is understanding the process, knowing exactly what’s involved and following the process to the letter.

The great thing with projects like this is that they offer an excellent opportunity to make a very good profit. Even better is the fact that most people will overlook the opportunity because they don’t understand the process, which gives you an excellent advantage.

Best wishes.

Bernie Wales


Here’s an Interesting Question About Title Splitting – But it’s Not What you Think — 5 Comments

  1. Hi Bernie

    What if you have share of freehold and have asked permission of the joint freeholder, got planning but not altered the lease . Can the joint freeholder then ask for a premium once works have been completed ?

    • I assume from the way you frame the question – there are two flats in the building. I also assume you hold the freehold in joint names (i.e. personal names) and not through a company.

      You need to look at this wearing two hats, so to speak.

      Firstly you have your leaseholder hat – and you should approach the freeholder to get permission for whatever you want to do. This might involve a Deed of Variation, a Licence to Alter, or whatever is appropriate depending on what you want to achieve. Getting that permission will have a value – and a premium may need to be paid accordingly. You’ll also have the freeholder’s legal costs to pay.

      Secondly you have your freeholder hat – and you (and your co-freeholder) should act objectively in dealing with the leaseholder’s request. You’ll need to assess the value of what is being proposed … as if this was an arms-length process … and agree the details as appropriate to the situation.

      Depending on the circumstances, professional advice (such as a valuation) may be required.

  2. Hi Bernie,

    Slightly different situation. I’m looking at a flat that’s split over two levels. It’s huge, and a massive waste of space at only 3 beds. I could create two 2-beds and make a great profit. As I understand it, I’d need a Deed of Variation on the current lease, a Licence to Alter to cover the physical alterations, and then “just” agree a new lease matching the term of the existing.

    The freeholder is a housing association, and I feel they’re going to be hard to convince, but it would be good to know if there’s a way to do it.

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