We have 65 properties worth £5.7m – the trick we used to build a portfolio

James Lynch and his partner Laura Hoyland were working as project managers in the corporate world when Covid hit, but also had a portfolio of five properties, a 20-minute cycle ride from where they lived in Bristol. As it did for many, the pandemic gave them the chance to re-evaluate their situation. “When you were able to leave the country, we went on holiday to Portugal. We did property work between 9 to 12 in the morning and then spent the afternoon and evening exploring,” Mr Lynch said. “We decided we didn’t want be in corporate jobs anymore, we wanted to do the property stuff all the time.”

Title splitting

They created a five-year plan to leave their jobs – but were able to do so after just 18 months by using a method known as “title splitting” when buying up blocks of flats. In their original portfolio of five properties, the couple realised two were outperforming everything else – a block of two three-bedroom flats which were on one single freehold title. “I researched buying more blocks of flats and discovered the concept of title splitting, which allows you to buy more flats with limited funds,” Mr Lynch said. The technique involves purchasing multiple flats on a single freehold title and then, on the day of completion, splitting the title to create multiple leasehold flats, each with a 999-year lease. The application for the split is made to the Land Registry.

Bulk-buying vs supply and demand

Typically, the aim is to increase the value of the property as a whole – the leasehold flats are worth significantly more individually than they are together on one title. Mr Lynch used the analogy of bulk-buying a six-pack of soft drink cans in the supermarket for £2.99, versus an individual can at your local newsagents for £1.20. “There are two economic processes going on: bulk-buying and supply and demand. A lot of people want one- or two-bed flats but not one block of 10 one-bed flats. “On one freehold title, these 10 flats are only available to investors, but individual leasehold flats are of interest to anyone. By creating leasehold flats, you’re making them available to other people.” A flat that has been split into a single leasehold property can be worth up to 30 per cent more than a flat that shares the freehold with others. (Photo: Rosemary Roberts/Alamy)

Bridging the gap

Mr Lynch also does not put down a typical deposit to make the purchase. Instead of the 25 per cent deposit most lenders require for a buy-to-let mortgage, he buys the blocks of flats with bridging finance on the understanding that, on the day of completion, the block will simultaneously be split into leasehold properties and be worth 30 per cent more – this is effectively his deposit. Bridging loans are short-term loans used to help a person “bridge the gap” when they want to buy something, but are waiting for funds to become available from the sale of something else. Mr Lynch said: “For example, if you have 10 flats in a block, which cost £1m, I will have worked out that the separate flats are worth £140,000 as leaseholds on the open market. You’re effectively saying to a lender that the block will be worth £1.4m at completion. “On the day of completion, the solicitor (theoretically) grants the 999-year leases simultaneously and the lender never takes a risk. They always have 75 per cent loan-to-value and a higher value has been achieved.” (Photo: Catherine Falls Commercial/Getty)

Confirming figures

To make sure his calculations add up, while the conveyancing is going on Mr Lynch gets a RICS surveyor to confirm his figures. “If the valuation comes back and it’s worth less, then you’ve thrown away your valuation fee of £3,000 and the legal fees. Fortunately, I’ve not made that mistake yet.” Once the property has been purchased, the leaseholds are registered with the Land Registry. Ordinarily, this takes 18 to 24 months, but Mr Lynch gets them expedited so the period is nearer to six months. At this point, he can swap the expensive bridging finance for a standard buy-to-let mortgage. He always retains the freehold and leasehold of the properties, via a parent and subsidiary company, and rents them out through managing agents to a mix of young professionals, factory workers, nurses and those on benefits. (Photo: Nuthawut Somsuk/Getty/iStockphoto)

Finding the right properties

For the properties that have mortgages, he acquires them from a range of specialist lenders. The couple now have 65 properties, across Bristol and West Wales, and a portfolio worth £5.7m, £2.3m of which is equity. This is set to increase to 73 properties next week with a new acquisition. The portfolio’s gross rental income works out at £35,000 a month, while the net (minus the mortgage interest repayments) is £21,000, although this does not include maintenance and renovation costs. “The hard bit is finding the right properties,” says Mr Lynch. “I always check the utilities early on as some flats were broken up badly in the 1970s and they share a gas boiler with the flat upstairs. If the utilities aren’t split properly, it’s hard for renters and you won’t get lending on it. The perfect purchase would be a block of flats built 10 years ago, purpose-built with building control documents, fire risk assessments and an asbestos survey.” (Photo: Dominic Lipinski/PA)

'Many people haven't heard of it'

In the early days, the couple trawled portals and bought at auction, but they now use deal-sourcers, buying agents or people who approach them via word of mouth about available blocks. Mr Lynch said: “We stumbled our way through the first title split. [It’s] niche – people either haven’t heard of it or, if they have, they think it’s a complicated process. There’s less information out there and not much to follow.” He now runs a consulting business, The Title Split Consultant, mentoring and teaching people about the process so they can do it themselves. (Photo: Getty)

'We travelled around the Caribbean while working about five hours a week'

“We have a much better work-life balance but it’s all about peaks and troughs. We’ve had times when we’ve worked 20 hours a week, and sometimes 60-hour weeks, but, overall, it’s way below what we did in our corporate jobs.” The flexibility of having a property portfolio has given the couple the opportunity to take time out for travelling and hobbies. “In the winter of 2023, we spent four months travelling around central America and the Caribbean, while working about five hours a week on the business. Laura does horse-riding, three or four times a week, and she can ride when it’s convenient. I go to the gym; we fit work in around our lives.” In terms of the future, he is not sure what he will do with the portfolio: “I always planned to hold on to them for a long time but, this weekend, I’ve started to think if there is a point where we should liquidate part of it or the whole lot.” He is considering spreading the equity around a wider variety of assets or diversifying in some other way, but says it is likely he will always come back to property: “I’d probably start buying again as it doesn’t feel like work.” (Photo: Michael Runkel/Getty/Collection Mix: Sub)

What to know about title splitting

Although title splitting can be beneficial, it isn’t the most common approach for various reasons. According to David Hollingworth of L&C Mortgages, anyone looking to take this route would need to get consent from the mortgage lender as it will impact the value of the property, which is the lender’s security. “You’d also want to have an expectation that planning permission would be possible and that won’t always work,” Mr Hollingworth said. James Smith, director of Holden Smith solicitors, added: “The process is complex and has potential pitfalls. It is essential that any client takes advice from a solicitor who is specialised in this type of work. “Leases must be carefully drafted to comply with lender requirements – eg the Council of Mortgage Lenders Handbook – including clear demarcation of demised premises, rights, and obligations. By not getting a specialist, any remedial work to sort could be very difficult.” Things to consider before going ahead include whether the units are self contained – which they need to be in order to be split; whether the flats comply with building regulations such as fire safety; and legal considerations. (Photo: Peter Dazeley/Getty/The Image Bank Unreleased)

Leasehold vs freehold

Freehold: A freeholder own their property, including the land it is built on, with no fixed time limit. If you buy a freehold, you are responsible for maintaining your property and land, and you should budget for these costs. Most houses are freehold. / Leasehold: A leaseholder owns a property for a fixed amount of time, leasing it from a freeholder who owns the whole building or land it is built on. Usually, your lease will be between 90 and 999 years. The length of your lease will be in your lease agreement with the freeholder. Most flats and maisonettes are leaseholds. This means that while you own your property within the building, you do not own any part of the building it is in. You might need to pay ground rent and monthly or yearly maintenance charges. (Photo: Ian Nolan/Getty/Image Source)