The term title splitting in property circles refers to the division, i.e. splitting of the title deeds of a building. This would be because you have created more properties from the one building, and in doing so you increased its commercial value. Not only does it boost the yield from that building, but also the size of your property portfolio.
A large HMO, for instance, could probably be divided into several apartments, making it ideal as a title split. A similar property title split could be achieved with a former nursing home or even a townhouse over several levels.
Best properties for a property title split
Large properties are obviously better for a title split, since the more apartments from the one property, the higher the rental yield. The best type of property is one which requires refurbishment. That way, you won’t pay as much for it but, at the same time, you should be able to rent out rooms while you renovate the remainder (if it’s not dilapidated). This means you will have income to help fund the actual renovations.
It’s not always existing properties that make the best title splits either – it could be the property that has not yet been built. By that we mean buying a piece of land and erecting two properties on the one title deed and then splitting, which can prove to have an even higher commercial value.
All you would have to do is contact the Land Registry for permission to split the titles in the first place. Not only will you have to let them know how you plan to build but also what you intend to do with the building afterwards, ie sell the title but retain ownership of the land, on a freehold basis etc.
The same property title split principle can be applied when you buy a house with a garden large enough to build another property on the land. Corner house plots, in particular, tend to be very good for this as they nearly always have more land than semi-detached homes.
The ‘downside’ of title splits
It’s worth remembering that when you do your financial calculations, you’ll have capital gains tax to pay when selling a property that isn’t your main residence. You’ll also have to factor in refurbishment costs, as well as labour and materials, if you’re building an additional property from scratch. There will also be Planning approval you need to apply for from the relevant local authority, a survey done and legal costs.
Learning about title splits with Sourced
Title splits can be a profitable property strategy if you know how to search for good properties or land. For instance, you will want to know that you are buying a freehold property and not leasehold. You’ll also need to ensure that the rooms in your new property comply with minimum government standards, otherwise you won’t be able to rent them out.
At Sourced we offer training in the property title split strategy. We also have the resources and contacts that franchisees can use to help find these properties in the first place. For more information on the benefits of joining our Sourced franchise download our prospectus today.