Turning residential terraced property into flats

Answered on 12 October 2017 by Nick Morrey

I currently have a mortgage on a residential terraced property and was thinking of splitting it into three flats. If I get through the planning permission and building regulations and go ahead with the works, how will it affect the mortgage? Would I need a solicitor to register the two flats separately and then get two new mortgages? If so, would I be able to sell one of the flats to a family member and put the mortgage charge on the remaining flat?

A lot of borrowers have been doing very similar things of late, and you are right to question how it will affect the mortgage. The loan you currently have will have been granted on the basis of the property as it stands and the lender must be notified of any proposed changes to their security.

You would need to gain their consent before commencing any of the work to convert the house. In most cases the incumbent lender will not grant permission and you will need to arrange development finance to allow you to proceed with the conversion. Once the work has been completed, your solicitor can then arrange to have the current title split into three, and you can arrange separate mortgages on them or sell them as you wish. You will also need your solicitor to sort out the ownership of the freehold, as this cannot be held in the same name, along with a maintenance agreement, etc.

In cases such as this, I would recommend that you take expert advice, and as such I would like to put you in touch with one of our consultants who specialises in this kind of mortgage on 0344 346 3672.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


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