Title Splitting Explained

Oddly enough my first ever deal I sourced and traded was a title split and it was a baptism of fire!

It generated me around £17,000 so it was worth the headache once it was all said and done.

So what is a title?

Each individual property in the UK has a document that is called a 'title or title deed'.

A title deed shows who owns a property and may include any rights and restrictions relating to the title, such as a mortgage over the property, easement or covenant.

Title deeds are digitally held by the land registry and can be purchased by anybody who wants to look at the details on the title of any given property.

This is also how you can find out who owns a property if your looking for the homeowners details.

So what actually is title splitting?

This is when a large property or house has been converted into flats or individual units, once this is done, sometimes the original title is then split into multiple titles for each new flat or dwelling.

So there's one title for each single flat.

Each individual flat has it's own utility supplies and is completely self contained as a property in it's own right.

OK so where is the benefit of title splitting?

Let's use a basic example, so imagine a large house and it's worth £200,000 but the owner of the house decides he wants to convert the property into 4 individual flats.

Once the conversion has taken place and each flat is created, the owner could (if all the flats have their own utility supplies) split the existing title which would be for a house into 4 separate title deeds.

The reason is often to sell them off as individual flats.

The financial benefit could also be it increases the overall value of what was once a single house.

So remember we said it was worth £200k as a house, but lets now value them as individual flats...

• Flat 1 is worth £100k

• Flat 2 is worth £100k

• Flat 3 is worth £80k

• Flat 4 is worth £80k

So the total value is now £360,000 - which is an increase of £160,000

Sometimes... as it was in my case, the property will already have been converted into individual flats but will still be on one title deed.

So it will likely be valued as one property on one title deed as it is seen as one property.

If you split the titles it can often add a great deal of value.

You can look out for the following and see if the numbers stack up...

1. You could look for large houses that could be converted into multiple units

2. You can look for large houses that are on one title but have been converted already (but not title split)

Obviously when analysing potentials you will need to know the following:

• Average cost of conversion for each flat (depends on size) usually £40k to £55k per unit

• Legal cost of title splitting and creating multiple new deeds (speak to 3X solicitors)

• Find comparables for similar flats near by so you can work out the potential end value

• Time it will take to get utilities hooked up (this can take a lot longer than you think!)

Title splits are relatively easy to analyse, the key is getting the right valuation or a high enough valuation for the flats/units once they are created.

This is where having evidence of strong comparables and doing a good quality conversion will come into play.

One top tip is: If you are looking for nearby flats as a comparable don't ever compare new build modern flats with a flat in a reconfigured building. New builds always attract a premium price.

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