Splitting a property in two.
They say two is better than one, but is that always the case when it comes to properties?
While splitting a property in two can be profitable, particularly if you’re planning to rent them out, it’s never as simple as sticking up a diving wall and fiddling with the plumbing.
If you’ve spotted a property that’s perfect for splitting into multiple homes, here are some of the things you’ll need to think about.
Is it legal?
Before you start, you’ll need to talk to a solicitor and make sure there’s nothing stopping you splitting a property in two. The deeds of the house – particularly in older homes – may contain caveats that mean you’re not allowed to split the property.
If you get the all-clear, the next hurdle will be planning permission. Each local authority has its own rules on things like access and minimum room sizes, so you’ll need to know what these are before you start drawing up plans. Even if planners don’t have any objections in principle, you’ll need to speak to Building Control, as they’ll be more concerned about detailed standards like sound proofing, fire risk and insulation; they and the planners will both want to see your plans once you’ve applied all their requirements.
If you get the go-ahead from the planners, you’ll need to go back to your solicitor: if you’re turning a house into two flats, you’ll most likely be changing the property from a freehold to two leaseholds, and you’ll need to ensure these agreements are in place before you progress to selling or renting out.
Is it practical?
Two homes means two water, gas and electricity supplies, so you’ll need to talk to your utilities companies early on to make sure this is possible. You’ll also need to consider things like rights of access, where drains run, and where the boundaries are for each property.
Think, also, about what your prospective buyers or tenants are likely to want – is it large, open-plan living spaces or individual rooms? – and whether your plans are going to deliver on that. Think practicality and marketability, not just profit margin or rental yield.
Is your lender onboard?
If you already own the property and have an existing mortgage, it may be that your lender will want you to amend this mortgage or change the product you have.
If you’re borrowing to fund the purchase of the single property, some mortgage or auction finance lenders will only give you what the property is currently worth, which may not fund the work you need to do to complete the split. If you’ve got the cash in the bank to pay for the conversion, that shouldn’t be a problem - and it might just be an easy way to earn some extra money.
Lending decisions are subject to an affordability/creditworthiness assessment.
Any property used as security, including your home, may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.