One building, two flats

THE QUESTION

I'm viewing a house which has been split into two flats. I believe that the title has not been split. What are the rules for lending on a property like this? I am guessing I won't be able to use a standard BTL mortgage? Anything else I should be wary of for a property converted into two flats?

THE ANSWER

The first rule on any property divided into flats is to check with the local planners that permission to do this has been applied for and approved. Two reasons for this:

1. It is the first thing any lenders surveyor does.
2. If it has no PP it is unmortgageable with any lender as it is an illegal conversion.

There is an amazing number of these flat conversions that are done without PP, as the owner doesn’t think beyond 'Hey, I can get more rent if I can split it into flats.'

If you can establish it has been used as flats for a number of years you can apply to the council for retrospective PP.  Even more amazingly very few vendors actually do this; they just try to sell an unmortgageable property - and therein lies your opportunity.

Pointing out to the vendor that that have illegally converted their property and so no lender will lend on an illegal conversion means that their only option is to sell to a cash buyer - and we all know what cash buyers do - batter down the price using their cash as the leverage.

If you have the cash you can bag yourself a great deal, then go to the council, get the retrospective PP and shazam! You now have a mortgageable property.

Even if you don’t have the cash you can still bag yourself a great deal, by using bridging finance. Bridgers don’t give a stuff that it is an illegal conversion, so they will lend knowing you can get retrospective PP.

Happy days!

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