Placing a Split on the Freehold Title
From what you’ve described, the issue usually isn’t that lenders “can’t” lend on a single freehold title. It’s that many lenders struggle to get comfortable when a building is now two self-contained dwellings but still sits under one freehold, because it can fall between product types.
Your original facility was arranged on a shop + flat basis, which often sits in a semi-commercial or commercial lending bucket. Once the shop is converted into a separate flat, you’re effectively dealing with a small residential block, and a lot of mainstream residential and buy-to-let lenders prefer that each flat is held on a long lease, with the freehold sitting above it.
That lease structure makes the property simpler to value, easier to insure and manage, and easier to sell if a lender ever had to take possession.
Why lenders often ask for two long leases
It’s largely about enforceability and saleability.
With two flats on a single freehold title, a lender can worry about:
- how rights and responsibilities are documented between the units (repairs, access, services, support, shared areas)
- whether there’s a clear “management” framework (even if you own both flats)
- whether the valuer will treat it as a single dwelling, a multi-unit freehold block (MUFB), or something non-standard
- how readily the property could be sold in parts, or refinanced later, without legal changes
Two long leases, with you retaining the freehold, usually answers most of those questions in one go.
Do you have to split the title?
Not always.
There are lenders who will consider a refinance where a freehold building contains two self-contained flats, particularly if:
- the loan to value is sensible
- the rental picture is strong and evidenced
- the valuer is comfortable with the configuration and marketability
- the legal position is clear (planning, building regs sign-off, separate council tax, separate utilities where relevant, insurable rebuild basis)
Where it becomes harder is if you’re trying to place it with a lender whose policy is “leasehold flats only”, or whose valuer flags it as a non-standard risk.
When keeping a single freehold can still work
In practice, you’re usually looking at lenders that already understand:
- multi-unit blocks under one freehold
- more specialist buy-to-let underwriting
- semi-commercial transitions where use has changed over time
If you’re aiming to refinance onto a standard residential or vanilla buy-to-let product, the “single freehold with two flats” structure can be the sticking point, even if everything else is strong.
If you do create two long leases, it doesn’t mean “giving up” the freehold
This is the part that often gets missed.
Creating two long leases does not automatically mean you’re splitting ownership or selling anything. You can grant two long leases and still retain the freehold yourself. It’s mainly a way of putting a recognised legal wrapper around each flat, so lenders, valuers and solicitors can treat them like normal flats.
That said, it does involve legal work, and you’ll want a solicitor who does this regularly so the leases are drafted in a lender-friendly way.
What a lender-friendly lease setup usually covers
You normally want the leases to be clear on:
- repairing obligations for structure and common parts
- rights of support, shelter and access
- services (water, drainage, electrics) and who maintains what
- buildings insurance arrangements
- service charge mechanism, even if it’s “on paper” while you own both units
This is often why brokers push for leases: it reduces the number of judgement calls in underwriting.
How we’d normally approach this
If the preference is to avoid creating leases, the first step is positioning the case to lenders who are already comfortable with MUFB/freehold configurations, rather than trying to force it through a lender that will always default to “needs leases”.
If the best pricing and widest choice is only available with a lease structure, then the decision becomes a practical one: whether the legal cost and effort is worth it for the rate, term and refinance flexibility you gain.
Next steps
On the face of it, this sounds like something we should be able to place, but the right route depends on the loan size, LTV, how the flats are occupied/let, and how the valuer is likely to view it. We would be very happy to go through your enquiry in more detail, call us on 023 8235 2300 and we can arrange a convenient time to talk.
