Many of our clients are asking how to go about splitting the title of a freehold property into flats. We therefore thought many of you will find the following tips and information  useful:-

1. Many people don’t know this but you can’t create “freehold flats”. Instead you need to grant long leases of the flats (125 or 999 years is usually best).
2. You can’t grant a lease to yourself you can only grant it to (a) a third party or (b) a third party and you.
3. If you have a mortgage on the freehold, then in order to grant the long leases, you will need to get the consent of your lender. If you don’t,  you won’t be able to register the leases at the Land Registry due to the restriction on a freehold title.
4. You can either retain the freehold of transfer it to a management company and grant a share in the company to each leaseholder.
5. If you put a ground rent in each of the leases (which can go up over the years of the lease), the freehold may have a value which you can sell on to a specialist company who buys ground rents. The value might be somewhere in the region of between 5 to 10 times the total ground rents.
6. Service charges are important. If you plan to sell the leaseholds, the freeholder will have to be responsible for maintaining, repairing and insuring  the freehold of the building and you will need to ensure it can recover theses costs from the leaseholder by service charge.
7. It is also important to consider what rights the parties will need over the building  to make full use of their properties, for example, does someone need a right to enter a common hallway to get to their flat ?
8. You will need your  surveyor to prepare plans of the property showing the flats and the building which they form part of.

To talk through  your options and how we can help please contact us on 0161 772 4500 or info@ms-law.co.uk .