In a recent video, I visit my parents' new investment deal in Walsall, which is where I grew up! They spotted this house years ago and knew it would be a great investment deal due to the land on the property. They managed to get planning permission on the land and sold the house and land separately. You can watch the full video above to see how they did it!
This is known as title splitting, i.e. taking an existing property and splitting it into separate properties. Splitting titles is a great way to increase your profits in property. Many people have misconceptions about title splitting, but the reality is that it can be a quite straightforward process. If you can get planning permission to build a new home on land that forms part of the property that you have bought, you can often easily sell that land off to a developer. In this article, I am going to give you 3 ways to profit from title splitting.
1. Consider an option agreement
Often for it to be profitable to sell on a parcel of land split from an existing property, you need to get planning permission to build on that land. This can be tricky as you don’t want to buy the land only to find that you can’t get planning permission. You can mitigate this risk with an option agreement.
An option agreement is an agreement between you and the seller giving you the right, but not the obligation, to buy the property at a fixed price within a certain time frame. You will need to pay an option fee to the seller to secure this agreement. You can then submit a planning application and only buy the property if you are successful.
2. Find land that can be built on in a way that is in keeping with the area
To stand a good chance of getting planning permission, you need to make sure that it would make sense to build where you propose to. If there are not similar properties nearby, the land is not accessible or the property would otherwise conflict with the surrounding area, you are unlikely to get planning permission.
On the other hand, if other properties on the same street have done similar things, and if the proposed property is in keeping with the area generally, you stand a far better chance. An understanding of what is likely to be approved will come with time and experience.
3. Find a property that you can profit from splitting even without planning permission
In the video, my parents explain that even if they had not got planning permission for the property they bought they could have still sold the land they split from the property for a healthy profit. If you can make a profit from title splitting even if planning permission is rejected, that is ideal. This means you can buy without worrying about whether your planning application will be rejected or not. Having multiple exit strategies is always wise as you never know what may or may not come up further down the line.