Unlock Instant Equity with Title Splitting Bridging Loans
Smart property investors are using title splitting bridging loans to boost profits instantly when purchasing leasehold blocks of flats. By splitting the title of individual flats upon completion, the total value of the block increases significantly allowing you to refinance or sell at a higher price and unlock immediate equity.
In this guide, we’ll explore how you can use bridging finance to purchase a leasehold block of flats, split the titles, and increase the total property value from day one.
What Is Title Splitting?
Title splitting is a property investment strategy where you purchase a block of flats as a single freehold or leasehold entity and legally separate each unit into individual leases. This process increases the value of each flat, as individually sold flats typically fetch higher prices than a block sold as a whole.
Why Does Title Splitting Increase Property Value?
- Higher Sale Prices – Flats sold separately are often worth more than when part of a single block.
- Easier Refinancing – Lenders typically value single flats more than a whole block under one title.
- Increased Buyer Pool – More buyers can afford individual flats rather than an entire block.
- Stronger Exit Strategies – You can sell flats individually or refinance to pull out equity.
- Greater Market Appeal – Title splitting makes properties accessible to first-time buyers, buy-to-let landlords, and investors.
- Improved Lender Confidence – Lenders prefer financing smaller, individual units over an entire block of flats, making refinancing easier.
Using Bridging Loans to Fund Title Splitting Investments
Traditional mortgages are slow and inflexible, making them unsuitable for title splitting investments. This is where bridging loans come in, providing fast, short-term funding to secure the purchase, carry out title splitting, and refinance or sell for profit.
Key Features of Title Splitting Bridging Loans
- Loans up to £2 million
- Up to 100% of the purchase price (with additional security)
- Up to 100% of works (to cover any necessary improvements or legal costs)
- Flexible loan terms, typically 6-18 months
- Fast completion—funds can be available in days
- No monthly repayments – interest can be rolled up
- Available for leasehold and freehold properties
Loan-to-Value (LTV) Based on Open Market Value (OMV)
Bridging finance is secured against the OMV of the property, not the lower purchase price, helping investors borrow more and reduce initial capital investment:
- Residential Blocks – Up to 70% LTV of OMV
- Semi-Commercial Blocks (e.g., flats above shops) – Up to 65% LTV of OMV
- Commercial Blocks – Up to 60% LTV of OMV
How to Profit from Title Splitting Bridging Loans
Step 1: Secure a Leasehold Block of Flats Below Market Value
Find a leasehold block of flats being sold as a single unit. Often, landlords sell entire blocks at a discounted price, as there are fewer buyers for whole buildings compared to individual flats.
Step 2: Obtain a Bridging Loan to Fund the Purchase
Use a title splitting bridging loan to cover up to 100% of the purchase price and any necessary refurbishment or legal costs.
Step 3: Legally Split the Title into Individual Leaseholds
Once purchased, work with a solicitor to legally split the title so that each flat has its own leasehold title. This process can typically be completed within a few months.
Step 4: Refinance or Sell for Maximum Profit
With the titles split:
- Refinance at a higher valuation and pull out equity.
- Sell individual flats at a premium price.
- Keep the flats and rent them out, benefiting from higher valuation and easier financing.
Case Study: Making Money from Day 1 with Title Splitting
Investor Profile: Emma, an experienced buy-to-let investor, found a block of 6 leasehold flats in Birmingham being sold for £750,000.
Strategy:
- Used a bridging loan at 70% LTV of OMV to secure the purchase.
- Legally split the title into 6 separate leaseholds.
- The individual flats were valued at £175,000 each, giving a total value of £1.05 million.
- Refinanced at the higher value, pulling out £735,000 to repay the bridging loan and reinvest in new projects.
Outcome:
- Instant equity gain of £300,000 upon title splitting.
- Achieved higher rental income with individual units.
- Refinanced at a better rate due to increased property value.
FAQs About Title Splitting Bridging Loans
Q: How long does it take to split a title?
A: The legal process usually takes between 6 to 12 weeks, depending on solicitors and local authority approvals.
Q: Can I get 100% financing for a title splitting project?
A: Yes, if you have additional security, lenders can provide up to 100% of the purchase price and works.
Q: What are the typical exit strategies for a title splitting bridging loan?
A: The most common exits are selling individual flats or refinancing with a long-term mortgage.
Q: What happens if I can’t sell or refinance in time?
A: You can extend the loan, switch to a term mortgage, or sell at a reduced price to recover funds.
Q: Are there any risks involved with title splitting?
A: Risks include unexpected legal delays, planning restrictions, and market fluctuations. Working with experienced professionals can help mitigate these risks.
Maximise Your Profits with Title Splitting Bridging Loans
Title splitting is a powerful strategy for investors looking to unlock hidden value in leasehold blocks of flats. By securing a bridging loan, splitting the title, and refinancing or selling, you can generate significant profits from day one.
At Sunrise Commercial Finance, we specialise in title splitting bridging loans, helping investors access fast funding to maximise returns.
For more information contact us for a fees free chat.
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