Title Splitting Explained
Title splitting involves taking a single freehold building containing multiple units and legally separating them into individual leasehold titles to increase total value.
Title splitting is a powerful value-add strategy. It typically involves buying a block of flats on a single freehold title. Because the whole block is sold as one investment unit, it usually suffers a 'block discount' of 10-20% compared to the aggregate value of the flats sold individually.
By legally creating new leasehold titles for each individual flat while retaining the freehold, you immediately remove the block discount and uplift the total value of the asset. You also open up the possibility of selling the flats off piecemeal to standard residential buyers.
Refinancing Uplift
Once the titles are split, you can often refinance each flat individually on standard, highly competitive buy-to-let mortgages, pulling out significant capital based on their new individual open-market values.