In property investment, a title split can be a way to maximise your return on a property. The experts from Starck Uberoi Wealth explain how
What is a title split?
A title split is a legal process where a single registered title is divided into two or more separate titles, typically done by a property solicitor. This is often necessary when a property owner wants to split a larger property into smaller units, such as converting a house into flats or subdividing land. Each new unit receives its own title at the Land Registry, allowing for separate ownership, separate financing or a sale. Title splits are common in property development and can involve complex considerations around access rights, boundaries, and shared services, which should be carefully examined by the solicitor at the time of the title split.
What are the financial advantages of a title split?
Title splitting can enhance a property’s financial potential by increasing its overall value when divided into multiple, smaller units, such as flats, which are often valued higher per unit than a single large property. This division allows owners to generate more rental income, as multiple units can yield higher collective rents. Additionally, it provides flexibility, as units can be sold individually, offering liquidity options and appealing to a wider range of buyers. Title splits can also improve financing opportunities, as lenders often favour properties with separate titles due to their perceived lower risk.
What sort of properties are suitable for a title split?
Properties suitable for a title split include large houses, commercial buildings, and plots of land that can be subdivided into separate units. For example, a substantial single-family home can be converted into multiple flats, each with its own title, to increase value and rental income. Commercial buildings, like offices or warehouses, may also be split into individual units for lease or sale. Land parcels with potential for development, such as multi-home plots, are prime candidates for title splitting, allowing individual sales or leases. Each title split requires careful consideration of access, shared services, and local planning permissions
Once I have made a title split, can I choose whether to sell or rent the separate properties?
Once you have completed a title split, you have full flexibility to choose whether to sell or rent the individual units, as each now has a distinct legal title. Selling allows you to capitalise on the property’s increased value immediately, which can be advantageous if the market is favourable or if you seek quick returns. Alternatively, renting the units provides steady income and can be lucrative, especially in high-demand rental areas. Consider factors like market conditions, tax implications, and your long-term investment goals to decide the best approach for each unit.
What is the investment advantage of a title split over multiple property acquisitions?
A title split involves dividing a single property title into multiple, separate titles, effectively creating several smaller units within one asset. This approach can provide higher investment returns compared to purchasing multiple separate properties. Title splits allow investors to optimise rental yields, as smaller units typically command higher per-unit rental rates. It also enhances flexibility, allowing individual units to be sold or refinanced independently, providing liquidity without divesting the entire asset. Additionally, title splits reduce transaction costs, as the investor incurs fewer legal, stamp duty, and conveyancing fees than would arise with multiple acquisitions.
What are the tax and mortgage implications of a title split?
When splitting titles, each newly created unit may attract separate Stamp Duty Land Tax (SDLT), potentially increasing transaction costs. However, individual units may be eligible for reduced SDLT under certain thresholds, which could be advantageous. From a mortgage perspective, lenders may view each unit as a separate asset, potentially allowing individual refinancing, which offers flexibility. However, some lenders may impose higher interest rates or restrict lending based on the size and number of units in a block, so it’s crucial to review lender policies and tax liabilities carefully before proceeding.
Will I need planning permission to split a property into separate flats?
Yes, splitting a property into separate flats generally requires planning permission in the UK. Converting a single dwelling into multiple self-contained units typically qualifies as a “material change of use” under planning law, necessitating permission from the local planning authority. Additionally, building regulations approval will be required to ensure each flat meets safety, soundproofing, and insulation standards. Some properties may also fall under Article 4 Directions, which restrict permitted development rights, making planning permission essential. Consulting with the planning authority early can clarify specific requirements and streamline the process.
What are the Stamp Duty implications of a title split?
A title split can trigger Stamp Duty Land Tax (SDLT) implications based on the value or consideration paid for the split property. Careful planning is essential to assess whether splitting titles will result in more favourable tax treatment or higher SDLT costs. It’s advisable to consult a tax advisor for tailored advice on the specific circumstances.
What’s the story behind Starck Uberoi?
Starck Uberoi Solicitors, founded in 2011 by Jonathan Starck and Raminder Singh Uberoi, began as a partnership between university friends and has grown into a well-regarded six-partner practice with over 35 team members. They quickly realised that their clients would benefit from whole of market independent financial advice and so set up Starck Uberoi Wealth which is directly authorised by the FCA and headed up by Sam Thomas. The finance arm specialises in bridging finance, residential and buy to let mortgages, limited company mortgages, retirement planning, equity release and pensions.
With offices across London and Kent, Starck Uberoi places a strong emphasis on ethical standards, client care, and long-term relationships, aiming to provide tailored legal support based on a thorough understanding of each client’s needs.
Where can I find out more about Starck Uberoi?
You can learn more about Starck Uberoi Wealth, our services, and team by visiting our official website at www.suwealth.co.uk. Our website includes detailed information about our finance expertise, client success stories, and how to contact us. For inquiries, you can reach our offices in London via phone or email, with full contact details listed on our website. Additionally, the firm offers a contact form for personalised inquiries and consultations.
