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Splitting a semi-detached into 2 flats? Anyone done this?


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Anybody done this? Any advice or idea on costs to take a traditional SEMI and split it?

Properties are near an hospital and are huge - so would achieve better rents this way and rent easily. However no idea on costs so any guidance appreciated. 

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Hi,

Unfortunately I can't provide any help on the cost side of things. This would require planning permission, so definitely worth checking whether this kind of proposal is something that the local council is willing to approve. Sometimes they want to retain family sized housing so will resist the loss of houses into flats, which makes it quite difficult to get permission in the first place! Many Councils have specific planning policies in their Local Plan that relate to the subdivision of properties, so worth checking that when researching 

Tom

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Depends if you need a mortgage to make the initial purchase. Thats where it gets really messy. Ideally you want to purchase with cash or a bridge/development finance and then remortgage one of both of the flats to redeem that. A standard mortgage lender will have no security once you create leases as thats where the value is, and would absolutely prohibit this.

Also bear in mind that you cant be both freeholder and leaseholder. So you will need the freehold to be owned in a management company, which you can control, and that grants you the leases. You could use a spouse or partner, and have one freeholder and the other leasholder, but that causes issues if you need mortgages to be joint.

Its also worth mentioning that you can get mortgages for "multi-unit property" that is you can seperate this into 2 flats, with seperate utilities and access, but still keep it as freehold. The downside is limited and more expensive lenders (limited company rates), and a lower onward value with the fact you have to sell both at the same time. You can of course create leases later if you want to sell, but you have the mortgage issue described above.

These things are always messy, so speak to plenty of lawyers, brokers and accountants about the plan, their positions all conflict somewhat and success relies on reconciling all that.

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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9 hours ago, Stuart Phillips said:

Depends if you need a mortgage to make the initial purchase. Thats where it gets really messy. Ideally you want to purchase with cash or a bridge/development finance and then remortgage one of both of the flats to redeem that. A standard mortgage lender will have no security once you create leases as thats where the value is, and would absolutely prohibit this.

Also bear in mind that you cant be both freeholder and leaseholder. So you will need the freehold to be owned in a management company, which you can control, and that grants you the leases. You could use a spouse or partner, and have one freeholder and the other leasholder, but that causes issues if you need mortgages to be joint.

Its also worth mentioning that you can get mortgages for "multi-unit property" that is you can seperate this into 2 flats, with seperate utilities and access, but still keep it as freehold. The downside is limited and more expensive lenders (limited company rates), and a lower onward value with the fact you have to sell both at the same time. You can of course create leases later if you want to sell, but you have the mortgage issue described above.

These things are always messy, so speak to plenty of lawyers, brokers and accountants about the plan, their positions all conflict somewhat and success relies on reconciling all that.

Great feedback. We have one at the moment that is Multi-unit property, at least I assume it is because we bought the Freehold in one go for the property. We are not lending so this might be the best way to go?

Any idea of the add on cost to a standard 3 bed high quality semi refurb. Let's say that is £30k, then are we saying £15k on top for building regulation requirements and all the things needed for 2 seperate units? 

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Id tend to recommend mortgaging something you already have, to give you the cash to go on and buy something more complex. Its a known entity, and you already own it so the process is easier. That way you can raise the finance in your own time and then go buy essentially as a cash buyer (Its a mortgage offer ready to draw down, pretty much as good as cash).

I cant really comment on property values, i'll stick to my lane, but im sure others will chime in on development strategies

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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