Title Splitting Explained
Title splitting involves buying a single freehold building (like a block of flats) and legally dividing it into multiple leasehold titles so each unit can be financed or sold independently.
Title splitting is a sophisticated property strategy that can force massive capital appreciation without moving a single brick. It is commonly executed when an investor purchases an existing block of flats or converts a large house into apartments.
If the entire building is held on a single freehold title, its value is typically discounted (known as a bulk discount) because it only appeals to commercial investors. By instructing a solicitor to create individual leasehold titles for each flat, the investor immediately taps into the retail market.
The Refinance Play
Once the titles are split, the sum of the individual leasehold flats is usually 15% to 25% higher than the value of the unbroken freehold block. The investor can then sell individual flats or refinance them onto standard residential buy-to-let mortgages to pull their capital out.