--- title: "Holiday Let Title Split" description: "Discover how we helped split the title of a holiday let to maximise investment returns. Read the full mortgage case study and our tailored approach." url: "https://mortgagelane.com/case-studies/holiday-let-title-split" site: "Mortgage Lane" collection: "case-studies" date: "2024-08-23" author: "Joseph Lane" category: "Case study" reviewed: "2026-10-08" reading_time: "7 min" byline: "Joseph Lane" author_credentials: "CeMAP · FCA authorised firm" language: "en-GB" robots: "index,follow" --- # Holiday Let Title Split Discover how we helped split the title of a holiday let to maximise investment returns. Read the full mortgage case study and our tailored approach. Discover how we helped split the title of a holiday let to maximise investment returns. Read the full mortgage case study and our tailored approach. ## Case study Speak to a Mortgage Lane adviser about your options. ## In short Mortgage Lane sourced separate holiday let mortgages, with two different lenders, for the two flats created when a client split the freehold title of an eight-bedroom holiday let into two leaseholds. The two-bedroom Flat B stayed with Foundation Home Loans at a reduced rate of 6.24%. The six-bedroom Flat A was valued at £210,000 by that lender’s valuer, so we moved it to Castle Trust, where a panel valuer valued it at £330,000, which was £20,000 more than the client expected. ## Background A common strategy among our investor clients is known as Buy, Refurbish, Rent, Refinance (BRRR). A standard mortgage needs the property to be in a habitable state, and it does not allow significant works that change the property’s use or structure. Where a refurbishment is needed, or the property is uninhabitable, investors tend to take out a [bridging loan](https://mortgagelane.com/short-term-finance/bridging-loans). After a successful refurbishment, our client was ready to refinance. They decided to use the property as a holiday let to maximise monthly profit, which meant looking at [holiday let mortgages](https://mortgagelane.com/mortgages/holiday-let-mortgages). They had been given excellent holiday let income projections, which gave them confidence that this would be a successful investment and a great opportunity. On reviewing the property, they were interested in splitting the current freehold title into two separate leaseholds. Their eight-bedroom holiday let, held on a single freehold, would become two flats: Flat A, a six-bedroom flat, and Flat B, a two-bedroom flat. They spoke to a tax adviser about the tax implications of splitting the title and decided that it was financially beneficial to proceed in this way. ## What we needed to check when sourcing These were the important factors we needed to note while sourcing. ### Would the lender allow holiday lets, and how would it calculate affordability? For holiday lets, lenders calculate affordability in one of two ways: - **Estimated AST rent.** The lender bases affordability on the property being let as a standard buy to let, and uses the estimated assured shorthold tenancy (AST) rent when stress testing. Where a property has a higher valuation, this method does not tend to let investors reach the full loan to value (LTV). It would therefore not work for Flat A, although there was potential for Flat B. Lenders that calculate affordability this way generally tend to have slightly lower rates. - **Holiday let income projection.** Affordability is based on a projections letter from an established holiday letting agent, who can provide low, medium and high rental figures for the year. This tends to allow investors to borrow more, because holiday let income will inevitably be higher than if the property were let as a standard buy to let. We therefore needed to find a lender that used this method for Flat A. ### Would the lender accept the titles being split on completion? The property was a multi-unit freehold block (MUFB) of two apartments, Flat A and Flat B. We needed to be sure the lender was happy with the structure of the deal, which worked as follows: 1. Company X bought the property and its freehold using a bridging loan. 2. To split the title, the client needed a separate company that could hold the leases, so they created Company Y. 3. Company X remains the owner of the freehold, and creates and sells the leases for the two flats to Company Y. 4. Company Y buys the leases and flats, and the mortgage application is made in the name of Company Y. ### Valuers Valuers play a very important part in a mortgage application, because lenders will always lend based on the valuer’s comments. Many lenders use only one or two valuation companies, which tend to be national firms. Some specialist lenders “panel out”, which means they use a valuation panel with access to a number of surveyors who are more local to the security. Examples of valuation panels are VAS, Appraises and Method. This tends to help with more complex properties, as local valuers usually know the saleability and profitability of the specific area better than a national valuer. However, they tend to be more expensive, and there is always a chance that they will provide a similar result. ## Property values The values the client expected for each flat before the lender valuations. *Property Values* | Property | Value | | --- | --- | | 6 Bed | £310,000 | | 2 Bed | £130,000 | | Total | £430,000 | ## Choosing a lender After reviewing the whole market, we concluded that Foundation Home Loans (FHL) was the most suitable lender. FHL had previously offered holiday let products, but it would only calculate affordability using the estimated AST rent. Around the time of this application, it released new holiday let products with higher rates that could take holiday let income projections into account. This meant the client could receive a higher LTV, which was the client’s priority. After reviewing the lender’s products in full, we submitted an application for Flat A on its holiday let range, using income projections. This product was a five-year fixed rate at 6.94%, with the LTV capped at 70%. Flat B, however, was affordable on FHL’s standard short-term let range, which uses the estimated AST rent to calculate affordability. That product was cheaper, at 6.79% on a five-year fixed rate, and could reach an LTV of 75%. ## Underwriting and valuation with FHL After we submitted the two applications, FHL asked for its standard underwriting requirements and instructed valuations for both properties. All underwriting was reviewed and satisfied, and we then waited for the valuation reports. During that time the lender lowered the rates on some of its products, so we were able to reduce the rate for Flat B from 6.79% to 6.24%, which made a significant difference to the monthly payments. The report for Flat B came back with the value and AST rent as expected, so there were no further issues and the lender was happy to offer on that basis. The report for Flat A, however, valued the flat at £210,000, significantly lower than we expected. This had a large effect on the maximum loan the client could receive, and because of the down valuation the client decided not to proceed with that loan amount for Flat A. ## Finding a different lender for Flat A Because the titles were going to be split on completion, we changed the way we sourced the case. Instead of looking at financing both flats, we decided to keep Flat B with FHL and find a different lending option for Flat A. The lender we chose needed to be able to proceed with all of the following: - A title split - Affordability calculated using holiday let income projections - A panelled-out valuation, so that a local valuer who knew the area could apply that knowledge to the valuation figure Even with a panelled-out valuation, a higher figure was not guaranteed, and there was always a risk that the valuer would provide a similar one. On revisiting the client’s options, Castle Trust released a new holiday let product that allowed for all three points. The product had a 10-year term, with the first five years fixed at 6.39%. It was at 75% LTV, with a 3% arrangement fee and a 1% exit fee. The lender also had an offer under which it would refund the valuation fee, up to £2,000, if the case completed within a set time. After discussing this with the client, they decided the best option was to stay with FHL for Flat B and proceed with Castle Trust for Flat A. ## Second valuation and outcome We submitted the application and provided all underwriting requirements as soon as possible, while booking the valuation through a panel called VAS. A valuer from Certus Property Consultants visited the property and valued it at £330,000, which was £20,000 higher than the client expected. Because of the increase in value, the client was able to borrow 75% LTV of the new market value on the report. ## Buy to let or commercial investment calculator An illustration, not a quote: choose buy to let or commercial investment, then enter your own figures to see an indicative maximum loan. Explore your borrowing Start again Enter your figures in pounds. Your estimate updates as you go. Indicative maximum loan \- Enter your figures to see an estimate. Loan to value [Discuss your options](https://mortgagelane.com/contact) Indicative estimate only, subject to lender criteria and valuation. This is not a mortgage offer. Your property may be repossessed if you do not keep up repayments. ## Related case studies ## Talk it through with an adviser Published: 2024-08-23 Last reviewed: 2026-10-08 Source: https://mortgagelane.com/case-studies/holiday-let-title-split