Splitting title from Freehold house to two leasehold flats while MX hold the mortgage?

by Readers Question

12:20 PM, 5th November 2014
About 4 years ago

Splitting title from Freehold house to two leasehold flats while MX hold the mortgage?

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Splitting title from Freehold house to two leasehold flats while MX hold the mortgage?

Hi my husband and I have owned a mid Victorian terrace since about 2000, when we first purchased it had a separate flat on the ground floor, and first floor was two sort of bed sits.

We converted with planning permission and building control into two flats.
A one bedroomed flat on the ground floor and a two bedroomed two bathroomed flat on the first and second floor.

We have a mortgage with mortgage express, but originally purchased with cash, we now need to split the title so that the house is officially two flats and land registry need to have the mortgage companies consent to do this.

I don’t know how the mortgage company would view this, its been remortgaged with them on a few occasions so I am sure they must have the property down as two flats but all paperwork just have one address.

Doing this exercise as the tenant in ground floor flat has been accepted for a new boiler under the affordable warmth scheme and company help link following guide lines.

Any one else had a similar situation, don’t want to rock the boat with mortgage express.

Many thanks

Paulinerisk



Comments

Neil Patterson

12:25 PM, 5th November 2014
About 4 years ago

Dear Pauline,

You will in effect be creating 2 new properties which the lender will need to create a new loan and security over individually. Therefore you will have to apply to remortgage both, but as Mortgage Express do not lend on new mortgages you will have to find a new lender.

Question: is the affordable warmth scheme worth the effort cost and risks involved?

Mark Alexander

12:35 PM, 5th November 2014
About 4 years ago

I strongly recommend that before you enter discussions with MX that you have new mortgage offers in place with another lender as I suspect it is highly likely that they will insist upon repayment.
.

Graham Clarke

13:01 PM, 5th November 2014
About 4 years ago

I would do some research before you contact your mortgage company.
I purchased a similar property a couple of years ago that had already been converted into two seperate flats in the 70's & had planning permission etc but I could not get a mortgage with any mortgage company because there was not a seperate Deed for each flat just 1 Deed for the whole building so I ended up having to pay cash for the property.
So I bought the property with the intention of applying for seperate deeds later.
My properties are registered seperately, registered seperately with the council etc but still couldnt get a mortgage.
So be careful as Mark says you may have to repay your mortage.

Ian Narbeth

10:35 AM, 6th November 2014
About 4 years ago

Pauline
Neil Paterson is right. You will either need to create two separate leases out of the freehold or carve out one lease and have the freehold include the second. To do this properly needs some careful drafting and is not cheap. (Some people will try a "standard form" lease but these are often inappropriate for the particular building.) You need to consider carefully issues such as insurance, shared access, shared services, mutual covenants in favour of the other flat, responsibility for repairs and maintenance etc etc etc. I am not saying it can't be done - clearly it has been done many times - only that in my experience it is often done badly because residential conveyancing is seen as cheap and there is not the budget to draft a bespoke lease. That said, in London houses get "carved up" into flats and all sorts of funny leases are used and people still buy. It all appears to work well until someone stops and looks at the lease(s) and realises it or they are defective. Then a buyer can be stuck with an unsaleable lease and needs the co-operation of the other flat-owner(s)/freeholders to sort out the mess.

As Neil says Mortgage Express are unlikely to lend and so you will need to find a new lender in any event.


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