Splitting land titles on a country estate allows purchase with residential and buy to let mortgages

Large mixed-use country estates offer attractive potential to buyers, with outbuildings offering rental income from business units or home rentals. But a mixture of owner-occupier and rental can be problematic for lenders.

The Scenario

Our client, a senior manager in corporate hospitality, was buying a beautiful 4-bedroom manor house on a 67-acre estate in Buckinghamshire for her family. In addition to the substantial main house, a stable block annexe offered additional accommodation in two units – one with four bedrooms, the other with three, plus kitchen / living areas. There was also a 3-bedroom entrance lodge; our client intended to rent the additional accommodation out as three separate units.

The estate was being sold as one title, but mortgagors are reluctant to lend on properties that combine residential and rented properties, because of the issues involved with evicting tenants should the borrower default on the mortgage.

The Solution

The answer was to put the rental properties on four separate titles: the main house, each of the stable block units, and the entrance lodge.

It can seem like a daunting amount of legal work, but a vendor will quickly be aware that any purchasers needing finance will face similar issues. And in this case they were still only dealing with one highly-motivated buyer.

The legal costs of £500-£600 for each title transfer were manageably absorbed into the total purchase costs, and we were then able to arrange the four mortgages for our client: one residential and three buy-to-let.