Tony99

Splitting Title Deeds/Property for Self build in garden.

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Wondering if anyone has any advice/tips on the following:

We have planning permission to build a house in our garden. Our current house is in joint names [mine and wife] and we own it outright i.e. no mortgage. We are are going to sell our current house and move into the new build [probably put the current house up for sale when the new house is near completion so prospective buyers are not looking out on a building site!]. We will need to borrow money for the new build [and plan to pay this off when we sell our current house] and it seems the best way forward is a self build mortgage...we will need to split the title deeds to create 2 separate properties and it seems that it is very difficult to put the new property deeds in both our names according to the Land registry. Apparently, the new property has to be 'transferred' to someone?! I think I'll need to have my name on the new property to secure the mortgage as I will be the main earner ....

 

I am seeing a solicitor to get advice [we will have a shared drive so there will be that to sort out too] but has anyone been through this-particularly the issue with splitting a property that is owned and how did it work out. Any potential pitfalls [capital gains tax??] I should be aware of?! 

Many thanks!

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You may find it useful to chat to the mortgage company. They would take a charge over the land (including your current house), then you can build your new house, sell the current house and repay the mortgage company from the proceeds. When you sell you will transfer that part of the land with the current house plus the outside space that will go with it and it will be registered under a new title at land reg. Your new build will be the same title as current but with the old house removed.

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12 minutes ago, Mr Punter said:

You may find it useful to chat to the mortgage company. They would take a charge over the land (including your current house), then you can build your new house, sell the current house and repay the mortgage company from the proceeds. When you sell you will transfer that part of the land with the current house plus the outside space that will go with it and it will be registered under a new title at land reg. Your new build will be the same title as current but with the old house removed.

Thanks... It was the BuildStore mortgage people that told me I should split the property deeds before I applied for a mortgage. Having said that, I may involve another mortgage broker as I have not been overly impressed with BuildStore so far...

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As far as I know the only way to "split" the title is to transfer part of the land. This may be possible if, say, the land is currently in joint names and you transfer to sole name or vice versa. You could also transfer part to a ltd company owned by you. You can do the transfer for nil consideration, so no CGT, but check with lawyer and accountant first.

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See this thread..

https://forums.moneysavingexpert.com/showthread.php?t=5797650

 

You can't transfer from yourselves to yourselves so the two names to one has been suggested. Possible but unnecessary and potentially impacting in wider issues such as the mortgage etc  So you can apply to split the title as we've already explained. That involves an AP1, suitable plan and £40 fee. Plus an explanation as to why you want it split referring to the lender's requirements.



 

Google found what looks like form AP1 here..

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/744253/AP1__2018-05-25_.pdf

 

You should get a solicitor to help fill it in and will need plans of the site.

 

I'm not sure if you can give yourself an easement? That's another possible issue.  

 

I would also speak to a mortgage broker. You might find remortgaging your current property is cheaper then a specialist self build mortgage. Make sure to check out all the fees, including for early redemption. When we purchased a buy to let in the 1980s it was cheaper to increase our mortgage on the house we lived in than take out a new one on the buy to let.

 

Finally a reminder to make sure to get your self build CIL exemption paperwork done before you start any building work on site.

 

 

 

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My conveyancer seemed to think this was not that straightforward. Apparently because you are splitting/selling to yourself, even if to your own ltd company then it throws up issues. I can't remember the ins and outs without looking into it but would be interested to hear how you get on OP and whether mine was just being defeatist.

 

Having said that it wasn't impossible, just easier to build the new one first, then split title when you are ready to sell old one. If that is the case then probably to best to raise a mortgage on existing whole property, build new then settle mortgage when selling old. Be the cheapest finance surely?

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You might find that borrowing on the existing house is far cheaper than a self build mortgage

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3 hours ago, Oz07 said:

 If that is the case then probably to best to raise a mortgage on existing whole property, build new then settle mortgage when selling old. Be the cheapest finance surely?

 

22 minutes ago, bassanclan said:

You might find that borrowing on the existing house is far cheaper than a self build mortgage

 

I suspect you're both right...getting a remortgage may be cheaper although there are often significant early redemption fees. I'll need to do some more homework/get a good broker!

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@Tony99We did exactly what you are planning with the difference that there was no shared drive. This enabled us to divide the plot and register them separately before applying for our mortgage to fund the new build. So the obvious complication is the shared drive! You would really need to consult a solicitor IMO.

We arranged a mortgage with the Monmouthshire BS for a 10 year term. It was a perfect match for us, fixed rate for the first 3 years, no early redemption fee, repayment only and they were quite happy that we were using the funds to build a new house on our own land. The move into the new house coincided with the end if the third year. So worth trying them.

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@JanetE Thanks-I'll certainly look at Mounmouthshire BS....can I ask if it was a prerequisite of the BS that they wanted the property split or was that something you wanted to do yourselves?.....yes, the shared drive does need a solicitor to sort-going to see tomorrow!

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AP1 is what you need. 

 

I had had a nightmare with land registry. My solicitor was shut down before he registered the plot in my name. I had no idea and the guy I bought off remortgaged a few years later. Land registry refused my application because of the remortgage. 

 

Was a nightmare to sort out with more than a few sleepless nights. 

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3 hours ago, Tony99 said:

@JanetE Thanks-I'll certainly look at Mounmouthshire BS....can I ask if it was a prerequisite of the BS that they wanted the property split or was that something you wanted to do yourselves?.....yes, the shared drive does need a solicitor to sort-going to see tomorrow!

We applied for the mortgage after splitting the plots and the mortgage was for the original house. They were aware, I think, that we already owned the land for the new house but it was not relevant really as we owned the old house outright and that was what the mortgage was offered on.

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2 hours ago, Mr Punter said:

@JanetE how did you "split" the plots? Did you transfer part to someone else?

The whole plot belonged to us so we just drew the line on the plans, forwarded it to our solicitor and she then forwarded this to the LR together with the necessary forms.  IIRC this was pretty straightforward.

Edited by JanetE
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