Splitting Title and covenents.

[nubbins]

I wonder if you kind folk could help me on something I have overlooked regarding the title and a  covenant attached to my current property.

 

This is what I have at the moment:

 

A mortgaged residential property (No.405) with a large double garage (dashed lines) to the left of the property. There is a small substation (marked red cross)  to the left front of the garage with a single driveway running from the garage, past the substation to the road.

I have planning permission for a separate 4 bed detached (marked No 1b) which will involve demolition of the garage and widening the drive for the new house as shown below

I have a mortgage on No 405 which the lender has said I could I could split the title and still be within the loan to value range. They have sent a valuer around and taken into account the reduction of the land.

There is a covenant on the No 405 title which allows Southern Electric to access their substation from my driveway and basically says they are allowed access.

The current 2 year fixed mortgage ends in March

The No 405 title is registered to me and missus

 

What I want to achieve

 

I would like to split the title, raise finance using a self build mortgage, build the house and keep both properties.

 

I am going to get further professional advice and I have spoken to the Land Registry but just wanted to get a heads up first. My main worries are being able to split a title and have the new plot in both our names which we would need for financing. The other concern is the covenant being attached to 405 but splitting the title would detach the covenant from the current house to the new build plot. I am just trying to work out the best sequence to do this. Has anyone been through similar? :o(

 

Thanks

 

 

 

Edited November 23, 2018 by nubbins

[Moira Niedzwiecka]

I do not think splitting the title will alter the covenant attached to your current property.

It will remain on both titles.

I have split my title & built on a piece of garden land that was not attached to my existing property, but, was on the same title.

Even with a new title number all of the covenants & rights from the existing house remain.

[newhome]

14 minutes ago, Moira Niedzwiecka said:

I do not think splitting the title will alter the covenant attached to your current property.

It will remain on both titles.

I have split my title & built on a piece of garden land that was not attached to my existing property, but, was on the same title.

Even with a new title number all of the covenants & rights from the existing house remain.

 

I'm in Scotland where they are called burdens not covenants but it will be similar I'm sure. The plot here was split into 2 but the burdens (that relate to access of the plot for maintenance of an area behind the plot in a similar way to your own access covenant) apply to both properties. The access route over the land was altered when the plot was split and the access gate was moved, and this had to be agreed with the company involved. It was done incorrectly as it happens (but that's another story). The company in question still insists that the entire area is under a burden however, not just the bit they need to access in order to get to their gate at the back of the plots. 
 

[MikeSharp01]

Watch out for the tax person (used to be a man, now more appropriately gender neutral but still as difficult!) as you will create a second home for yourself and may need to sort that out and there will perhaps be a capital gain crystallising if you are not careful. in your shoes I would be talking to a professional, in my shoes I should be talking to a cobbler.

[nubbins]

Thanks, that is very interesting and the first time I have been told that any covenants would be on both the old and new titles, even Land Registry did not mention that.

Did you manage to get the new title with your own names as I have been told that the new title would have to be in either mine or my wifes name only or a 3rd party as the Land Registry won't create the new title with both mine and my wifes name (for some reason).

 

Mike ha ha thanks, I will do. I did check into this bit and as I am moving into it I think I will be ok just CGT if I eventually sell which I won't be doing for a while...the CIL payment from the council is £43,000 if I sell within 3 years!!

[newhome]

48 minutes ago, nubbins said:

Did you manage to get the new title with your own names as I have been told that the new title would have to be in either mine or my wifes name only or a 3rd party as the Land Registry won't create the new title with both mine and my wifes name (for some reason).

 

I didn't own the whole plot. It was split and sold off to 2 different people (one was me). That seems very odd that you can't split titles in your own names though 

[Mr Punter]

Also if you transfer the plot you may need to declare it at open market value and pay stamp duty on the value.  If it is an issue you could do the transfer before you obtain planning - to keep the value low.

 

I have only come up against this issue with a transfer between companies owned by me and the position between spouses may be different.

[Temp]

Covenants normally get split automatically so they apply to both parts. However I think if you get permission from the land owner that benefits from the covenant it should be possible to get it removed from the existing house after the split.

 

Or you could just leave it as it might be unenforceable after the split so easier to remove? Speak to a solicitor.