Should Landlords Split a Freehold into Leaseholds?
Understand freehold-to-leasehold title splitting: what is involved, when it makes sense and what the current reform landscape means for landlords.
14/09/2026By Sunil Chander · Co-Founder
Understand freehold-to-leasehold title splitting: what is involved, when it makes sense and what the current reform landscape means for landlords.
For landlords and property investors who own a multi-unit building under a single freehold title, the question of whether to split that title and create individual leaseholds is one worth asking. Title splitting is a legal property strategy in which a building held under one freehold is divided into multiple individual leasehold titles, without necessarily involving structural work or physical changes to the property. The appeal is clear, but the complexity is equally real, and the regulatory environment in which the decision now sits has shifted considerably.
What does a title split involve?
When you divide one property into several new ones, you complete a title split, which produces one retained freehold title and several new leasehold titles. Each unit is registered separately with HM Land Registry and held under its own lease, typically granted for a long term, such as 125, 250 or 999 years, depending on the structure and commercial objectives. This should be handled by a solicitor experienced in leasehold title splitting.
Before any documents can be finalised, several prerequisites must be addressed. If you have an existing mortgage on the freehold, you must obtain your lender's formal consent before proceeding, as lenders will want to ensure the property's value is not adversely affected. There can also be complexity around being both the freeholder and a leaseholder. It is essential to receive advice on the appropriate steps should this scenario be applicable.
Why landlords choose to split freehold and leasehold
The primary motivation for a freehold to leasehold conversion is value. A single-title valuation of a multi-unit building rarely reflects the combined value of its units held individually. Individual leasehold titles are valued more favourably by lenders, improving flexibility in managing or selling individual flats separately from the whole freehold building.
For landlords who wish to retain ownership rather than sell, the split preserves long-term control through the freehold reversion. Some landlords retain the freehold to preserve control over building management and to recover legitimate service costs through the service charge mechanism. However, ground rent should be treated with caution, as most new regulated residential long leases in England are now restricted to a peppercorn ground rent. The retained freehold carries also its own capital value, but under current and forthcoming leasehold reform, leaseholders have expanded rights to acquire the reversion collectively, which may affect its value.
The costs involved
The legal costs for a title split include solicitor fees, Land Registry fees and surveying costs, and can vary considerably depending on the number of units and the complexity of the leases required. Fixed-fee specialist services exist, but landlords should seek professional tax advice separately, as the tax position is not typically included in a conveyancing quote.
When a new lease is granted for a premium, HMRC treats this as a part disposal of the freehold, which may give rise to a Capital Gains Tax charge where the property has increased in value since acquisition. Stamp Duty Land Tax may also apply, depending on the transaction structure. Getting tax advice before proceeding is essential.
The reform landscape: What landlords need to understand
Any landlord considering title splitting property now must also take into account the sweeping changes that are currently underway in leasehold law. The Leasehold and Freehold Reform Act 2024 received Royal Assent in May 2024 and, while many provisions are still being brought into force through secondary legislation, its direction of travel is unambiguous.
From 31 January 2025, leaseholders no longer need to have owned their property for two years before exercising the right to extend their lease or buy their freehold. This means that leaseholders created through a title split can move relatively quickly to acquire the freehold reversion from the landlord.
Other measures intended to make enfranchisement cheaper and easier, including valuation and cost reforms, are being implemented in stages. The draft Commonhold and Leasehold Reform Bill, published in January 2026, goes further still, proposing a ban on new leasehold flats and making commonhold the default tenure for new flats.
For landlords, this creates a material consideration. A title split that retains the freehold as a separate capital asset may, over time, face a well-organised group of leaseholders exercising their statutory right to purchase that reversion. The capital value of the freehold interest is therefore not fixed, and should be assessed in that light.
Conclusion
For landlords with multi-unit buildings and clear investment objectives, the valuation and flexibility benefits that title splitting can unlock remain genuine. But the process requires careful legal structuring, proper tax advice and an honest assessment of how ongoing leasehold reform may affect the value of the freehold reversion retained. Professional legal and financial advice is essential before proceeding.
FAQs
Q. What is the difference between title splitting and subdividing a property?
A. Title splitting is a legal restructuring of how a property is owned, not a physical change to the building. Where the units already lawfully exist, you register each unit under its own title at HM Land Registry without necessarily carrying out construction work or making a planning application. Subdividing, by contrast, typically involves physical works and requires planning permission and building regulations approval.
Q. Do I need planning permission to split a freehold title?
A. HM Land Registry does not require planning permission for a title split, but your local authority will almost certainly require it if the process involves converting a building into multiple separate dwellings not previously recognised as such. Confirm what consents are needed with your local building control department before instructing a solicitor.
Q. Can I be both the freeholder and the leaseholder in a title split?
A. Generally, the entity granting the lease and the entity receiving it must be legally distinct. A common solution is to hold the freehold in a limited company and grant leases to individuals. Your solicitor will advise on the right ownership structure for your circumstances.
Q. What are the typical legal costs for a title split?
A. Costs vary depending on the number of units and complexity of the leases, but you should budget for solicitor fees, Land Registry registration fees and any surveying costs. Tax advice on Capital Gains Tax and Stamp Duty Land Tax implications should be sought separately, as this is rarely included in a standard conveyancing quote.
Q. What tax considerations apply to a freehold to leasehold conversion?
A. Granting a new lease for a premium is treated by HMRC as a part disposal of the freehold, which can trigger a Capital Gains Tax liability where the property has increased in value since purchase. Stamp Duty Land Tax may also apply, and rental income from leaseholders must be declared. Professional tax advice is essential before proceeding.
Q. What is the freehold reversion and why does it matter?
A. The freehold reversion is the landlord's retained interest in the property after granting long leases. Historically, this could include the right to receive ground rent during the lease term and to recover the property when the lease expires. For most new regulated residential long leases in England, however, ground rent is now restricted to a peppercorn, so the reversion's value should be assessed carefully. Under current and forthcoming leasehold reform, leaseholders have expanded rights to acquire the reversion collectively, which may affect its value.
Q. How does the Leasehold and Freehold Reform Act 2024 affect title splitting?
A. The Act does not change how landlords physically split titles, but it heavily impacts the long-term value of the newly created leaseholds. The abolition of the two-year ownership rule means new buyers no longer have to wait two years before exercising qualifying lease extension or enfranchisement rights. Landlords must factor these enhanced statutory rights into their financial modelling.
Q. How long does a freehold to leasehold title split take?
A. The process typically takes several weeks to a few months, depending on complexity, the number of units and whether lender consent is required. Delays most commonly arise from mortgage lender response times or ownership restructuring that needs to be resolved before leases can be granted.
Q. Can I refinance individual units after a title split?
A. Yes, and for many landlords, this is a primary commercial motivation. Individual leasehold titles are generally valued more favourably by lenders than a single freehold block and each unit can be refinanced independently. Check lender criteria on minimum lease length and unit standards early in the process, rather than after the split is complete.
Q. Does the draft Commonhold and Leasehold Reform Bill affect existing title splits?
A. The draft Commonhold and Leasehold Reform Bill, published in January 2026, proposes banning new leasehold flats and making commonhold the default tenure for new flats. Existing leasehold flats are not proposed to be abolished, but the reform direction is relevant to landlords assessing the long-term value of freehold reversions. Legal advice should be taken as the Bill progresses.
About the author
Sunil Chander
Co-Founder
Sunil oversees operations and compliance at Pauzible, drawing on his extensive experience as the founder and CEO of Dawnbud Limited, a financial services consulting firm. His prior career included senior roles in investment banking at Smith New Court and NatWest. He holds an MBA from LBS, M Litt from Oxford and a PhD from Cambridge.
