Splitting freehold flats- leases acceptable to P/lender

[ajr]

I own two blocks of flats both on a freehold basis.I am considering the possiblity of setting each individual flat up on say a 99yr lease, with a view to selling off (if deemed nescessary) say one or two flats a year. My two principle reasons for considering this are; a/ to maximise resale value b/ as a 'standby get out stategy' pending all this HRSS & likely Licensing stuff we are all set to suffer.
I understand you cannot be both freeholder & leaseholder and therefore the freehold will have to be passed to a management company which I will also have to set up.

I would appreciate your views, and any pointers re someone who could handle the legal work


thanks,

Tony::confused:

[Poppy]

Interesting post.

You will certainly make immediate money by selling leases. But you won't continue to make money from doing this. You can only sell each lease once.


maximise resale value
Maximise resale value of what? If you mean the freehold - then you are wrong. The longer the lease has to run, the less value there is to the freeholder. Short leases are where freeholders have the potential to make money on extensions.


you cannot be both freeholder & leaseholder and therefore the freehold will have to be passed to a management company
Completely wrong! You can own the freehold solely. You can own the freehold jointly. You can own none, one or more leases in the block. You can manage the block yourself. You can pass the management to a company. You can do any or all of these things.

Where do your myths come from?

[ajr]

Interesting post.

You will certainly make immediate money by selling leases. But you won't continue to make money from doing this. You can only sell each lease once.


Maximise resale value of what? If you mean the freehold - then you are wrong. The longer the lease has to run, the less value there is to the freeholder. Short leases are where freeholders have the potential to make money on extensions.


Completely wrong! You can own the freehold solely. You can own the freehold jointly. You can own none, one or more leases in the block. You can manage the block yourself. You can pass the management to a company. You can do any or all of these things.

Where do your myths come from?

Many thanks for yopur reply Poppy,

Further clarification may assist.

a/ the purpose of this is to have grater flexibility around potentially selling.
If I sell to owner occupiers on say 99yr leases I will most likely make a better return than selling the whole block to a fellow invstor on a freehold basis. I can also offset the CGT sting a little more efficiently by making use of the annual CGT exemption.
I accept that each flat coould only be sold once.

b/ On long leases the freehold would be worth much less. Good news, my management company could buy it

c/ The Myth originates from The Woolwich (my buy to let lender)
Their legal transaction unit states 'In accordance with English Law a person cannot grant a lease to himself'. I freely admit that i may be mis-understanding this. I think maybe the problem is that initially I may have to have the leases drawn up in my own name and retain the option to sell these on later.

Further advice most welcome:confused:

[Tax Accountant]

Many thanks for yopur reply Poppy,

The Myth originates from The Woolwich (my buy to let lender)
Their legal transaction unit states 'In accordance with English Law a person cannot grant a lease to himself'. I freely admit that i may be mis-understanding this. I think maybe the problem is that initially I may have to have the leases drawn up in my own name and retain the option to sell these on later.

Further advice most welcome:confused:

I am not legally qualified or possess the full knowledge, but I would have thought that you would proceed as follows:

(1) Either set up a management cpmpany and allocate one share for one flat with a condition that each purchaser of your lease has an obligation to buy one share in the management company.

(2) Alternatively, you would choose not to have the managament company and decide to manage everything personally.

Having decided the way forward, you will then sell the long leases to anyone who wish to purchase one until you have disposed all the leases. Once all the leases are sold off, you could transfer the reversionary freehold interest to another limited company or better still to sell it to the company owned by all the leaseholders themselves.

In the meantime, the reversionary freehold interest and the unsold flats remain in your single ownership.

For all practical purposes, you only separate out the flats which are sold.

The mechanics should really be very straight forward and I am sure there will be many specialist lawyers in any particular town or city to handle this.

But first and foremost you need to seek advice from experienced surveyors in this field and also experienced tax practitioners.

Ramnik

[gunther1]

I am planning to buy a residential property and convert the ground floor into a cafe.
I will have a mortgage of circa £190k on the property (purchase price £240k) and about 30k of this will be used to convert.

My mortgage lender will not lend for commercial properties, only residential.

After the planned conversion, I may be able to secure the whole mortgage over the masionette only, therefore negating the need for a commercial mortagage (which i presume are more expensive?)

Can someone please explain how I will divide the property up legally i.e. 2 leasehold with management company owning the freehold?? and how i can secure borrowings over the 2 properties if at all?

Also, at what point will the property be deemed commercial. During conversion, after conversion? Will i be breaching mortgage terms by converting?
Thanks for your help

[jeffrey]

I am planning to buy a residential property and convert the ground floor into a cafe.
I will have a mortgage of circa £190k on the property (purchase price £240k) and about 30k of this will be used to convert.

My mortgage lender will not lend for commercial properties, only residential.

After the planned conversion, I may be able to secure the whole mortgage over the masionette only, therefore negating the need for a commercial mortagage (which i presume are more expensive?)

Can someone please explain how I will divide the property up legally i.e. 2 leasehold with management company owning the freehold?? and how i can secure borrowings over the 2 properties if at all?

Also, at what point will the property be deemed commercial. During conversion, after conversion? Will i be breaching mortgage terms by converting?
Thanks for your help

1. Yes. You will need a lease of the residential part at least.

2. However, you cannot really grant a lease to yourself; names on freehold deeds should differ from those on leasehold deeds.

3. You don't need a mgt. company. Perhaps put freehold into joint names immediately before they grant lease to you; or keep freehold in sole name and grant lease to joint names who would thereupon jointly mortgage residential part. The preferred choice may depend on tax position.

4. If existing mortgage continues until lease granted, you would need consent from mortgagee (lender) before beginning alterations.

[Donkin]

Jeffrey

You wrote

Not quite so. One can grant a lease without selling.
For instance, X owns freehold. X can grant lease to self + Mrs X.
OR
X transfers freehold to self + Mrs X, then they can grant lease back to X

Can you explain how this works. Will it cost anything more than a Solicitor preparing the Lease and registering with Land Register and Mortgage Company.

[Donkin]

If I set up a Freehold Company would I have to offer the Freehold to the Leaseholders under Right of First Refusal?

[jeffrey]

If I set up a Freehold Company would I have to offer the Freehold to the Leaseholders under Right of First Refusal?

Yes. See section 4(2) of LTA 1987, listing exempt disposals.
Note that s.4(2)(h) exempts transfers between family members, eg Mr & Mrs X in my original post.

[claire3t]

Good evening,
I wonder if someone could please guide me in the face of some conflicting advice...

I am about to complete the conversion of a terraced house into two flats. I own the freehold of the building and am planning on letting out the two flats. My financial advisor has said that my mortgage lender will require me to create two new long leaseholds for the two flats as they will not accept 'freehold flats' - I have researched this and it's not uncommon. All understandable so far and most of the value currently would be transferred from the freehold to the long leaseholds.

However, my solicitor has said that as well as the cost of creating these, I would not be able to be both the freeholder and the leaseholder due to the merger of the inferior title submerging back into the freehold. In which case I have a company that I could use for one or the other - again so far so good.
However, what about tax bills on 'deemed disposals' of the property interest?

Is there a way to appease the lender without incurring tax and solicitors bills?
If there is anyone who has any experience of this, I would much appreciate their help - I don't really want to switch lender if I can help it and I'm not sure this would solve the problem anyway.
Many thanks,
Claire

[Richard Webster]

If you had to create leases you would have have them in different names. So if the freehold just belongs to you then the leases would have to belong to you and AN Other or the other way round if the freehold is jointly owned at the moment.

You also have the extra legal work involved in creating the leases.

What I don't understand is why it is not possible to have a single BTL mortgage on a freehold property divided into two letting units. Please ask your financial adviser why this is not possible. Surely the lender can value the property and can work out the aggregate rental value of the two units and lend on that basis. I have never been able to understand why this is not possible. I would be interested to find out if there really is a problem from a lender's point of view, or it is simply something that financial advisers have not considered.

[gmateus]

Hi

Normally the lenders do not accept freehold flats, but your case is slightly different as you are not the owner of a freehold flat but of a freehold house with self contained units. Still, if your lender do not accept self contained units in a single freehold title, you have two options: create the leasehold titles or change lender.

I am a buy to let mortgage adviser so I came several times across with this situation, we have many clients with a freehold house that was split in self contained flats, I know a few lenders that accept this situation. If you explained before hand the situation to your financial adviser, I believe he/she advised you on the wrong mortgage for your case.

If you want further advice you can either contact me on 01772727191 or email me at advice@startpointmortgages.co.uk or you can visit our website http://www.startpointmortgages.co.uk

Cheers
Goncalo

[Richard Webster]

Great, so it is possible to get a BTL mortgage on a house split into more than one unit!

This should solve all these queries that have been on this forum on and off for months about creating a lease of your own property!

[gmateus]

Great, so it is possible to get a BTL mortgage on a house split into more than one unit!

This should solve all these queries that have been on this forum on and off for months about creating a lease of your own property!

Can be done and some lenders accept up to 20 self contained flats on the same freehold house.

Thank you Richard for you reply on my post

Goncalo

[claire3t]

Many thanks gentlemen for your advice, I have gone back to my lender proposing keeping the freehold intact and putting the flats within them on the condition that in the event of a sale leaseholds acceptable to the lender would be created at that point. I am also verifying the tax position with my tax accountant and will keep you updated on progress.

[allewitor]

Can anyone tell me if it is possible to split a current Freehold Title into two as the building to which it applies can be severed if necessary. It would also require severing the garden in half.

[Richard Webster]

You can do what you like, but whether it is sensible is another matter.

Only if you can make a vertical split through the building to turn a house into two terraces, with no rooms or spaces above or below rooms/spaces in the adjoining unit, can this be done ina way that will not present leagl probelms for the future.

I have seen it with a largish house, particular one on a street corner, where the "back addition" part has perhaps been extended a bit and then a vertical wall inserted from top to bottom so that there are clear boundaries and the same can be done with the garden. You do want to avoid flying freehold situations or freehold flats.

You may need to give adjoining owners rights of way over bits of pathway and garden etc but this sis not usually a problem.

[allewitor]

Thankyou Richard this is what I thought. My reason for asking is because I own two flats under the Freehold, which has a further 2 flats with QTs. I know if I sell one they will go for enfranchisement, and I want to keep the flat in the separate building with half of the garden, this garden is accessed from the side of the main building and no one accept me has right of way over it.

[Richard Webster]

Maybe more complicated than you thought.

You only do a split in title if the ownership changes. I had assumed you were going physically split a building vertically into two freeholds for sale. Unlikely Land Registry will be happy to divide things up just for the fun of it.

I had assumed you were intending sell part of the building. Even if you could split it into two titles still owned by you then I would suspect that the Collective Enfranchisement rules would ignore that and still treat it as one building. Otherwise property companies could go in for all kinds of scams to get round the law!

[allewitor]

We will be splitting the original Freehold at the same time as selling the first listed flat below we will then separate both Freehold Titles from their relevant Leases so that if Enfranchiseent takes place the matter is simplified(currently all the additional property other than the Long Leases x2 is held under the Freehold Title) so we will be creating three new Leases.

One new Lease for a flat which mirrors the accommodation of two existing flats above with have QTs. This new Lease will include part of the garden area which is directly in front of the flat, along with two parking spaces .

The new Freehold being created by splitting the original Title of the building vertically, will then have 2 new Leases attached. The first new Lease will be for a one bed flat with attached double garage and one parking space. The second new lease will be for a long strip of land on the side of the Property, which is self contained but will require rights of access over the communal carpark along with 2 parking spaces.

I appreciate this matter is quite complicated but as I am sure you will understand that unless the Freehold Title is severed from the flats it will cause complications when we sell one of the two flats - hope this makes sense.

[Stevie]

These lenders will accept a freehold house converted into self-contained flats:

Mortgage Express
Bristol & West (but only 2 self contained flats)
Mortgage Trust
Paragon
Woolwich
CHL

[Markonee1]

We will be splitting the original Freehold at the same time as selling the first listed flat below we will then separate both Freehold Titles from their relevant Leases so that if Enfranchiseent takes place the matter is simplified(currently all the additional property other than the Long Leases x2 is held under the Freehold Title) so we will be creating three new Leases.

One new Lease for a flat which mirrors the accommodation of two existing flats above with have QTs. This new Lease will include part of the garden area which is directly in front of the flat, along with two parking spaces .

The new Freehold being created by splitting the original Title of the building vertically, will then have 2 new Leases attached. The first new Lease will be for a one bed flat with attached double garage and one parking space. The second new lease will be for a long strip of land on the side of the Property, which is self contained but will require rights of access over the communal carpark along with 2 parking spaces.

I appreciate this matter is quite complicated but as I am sure you will understand that unless the Freehold Title is severed from the flats it will cause complications when we sell one of the two flats - hope this makes sense.

It all sounds very interesting; but hard to visualise. Try describing the structure better...
Is there a single building [forget sheds etc]
Are the flats taking up the whole of the building? I assume that you have two flats one on top of the other...Or is there a house and a flat in your possesion?
Are the other QT's placed conveniently beside you?
Is some/all of the land you are trying to separate off for youself entirely free of mention/rights from those other leaseholders?

Cheers
Mark

[jeffrey]

If the freehold area concerned is not subject to leases at point of freehold transfer, RFR will not apply.

[allewitor]

I apologise for confusing you all. The current Freehold is laid out as a three storey end of terrace property, which is divided horizontally into three flats. The flats on the first and second floor having QT's. The flat on the ground floor was included in the Freehold purchase.

To the rear of the property is a two storey annexe extension with a single storey corridor attaching it to the terraced house (although this area is not accessed from the main house, it has its own entrance). As it stands currently the flat described above and the ground floor flat in the main terraced house, situated directly below the two flats with QT's, do not have Leases they were purchased along with the Freehold.

The annexe is sited at 90 degrees to the original terraced house with 80% of the flat being on the first floor level above a double garage, which is currently being used by the ground floor flat sited in the main terraced building.

My question is, can this annexe building, including the garage, be severed from the original Freehold along with a strip of land from the garden. The garden is situated at the side of the terraced house and is not used by anybody accept me being the current Freeholder, and can I then create a new Title/Freehold for it?

[jeffrey]

My question is: can this annexe building, including the garage, be severed from the original Freehold along with a strip of land from the garden? The garden is situated at the side of the terraced house and is not used by anybody except me being the current Freeholder, and can I then create a new Title/Freehold for it?

If annex is severable and is undemised: yes, it can be split.
However, HMLR will not split the freehold title unless there are legally separate ownerships (e.g. if f/r owner transfers the annex to joint names or anyone other than himself alone).

[allewitor]

My tenant has a 999 year Lease granting them a right of way by car and vehicle over a forecourt and garage attached to the current Freehold, does this mean that this area cannot be seperated and retained under a seperate Freehold to the main building?

My reason for asking is that I want to severe a piece of land to the side of the property but I would like to attached the forecourt to the new Freehold as opposed to the old one. Will this have any implications on the current Tenants, would we need to re-write their Leases in order to achieve this?

[jeffrey]

My tenant has a 999 year Lease granting them a right of way by car and vehicle over a forecourt and garage attached to the current Freehold, does this mean that this area cannot be seperated and retained under a seperate Freehold to the main building?

My reason for asking is that I want to severe a piece of land to the side of the property but I would like to attached the forecourt to the new Freehold as opposed to the old one. Will this have any implications on the current Tenants, would we need to re-write their Leases in order to achieve this?
1. The easement will bind the freehold reversioner of the land over which it runs. This applies even if you split-up the f/r extent; splitting ownership of the "servient tenement" [burdened land, = your f/r] makes no difference to the "dominant tenement" [benefitted land, = leaseholds].
2. So yes- you can split the f/r however you want. The leaseholder's easement will continue unaffected, and you do not even need consent from the leaseholder. No re-writing of leases is necessary either.

[allewitor]

Thank you jeffrey. Does that mean that the current payments for repairs of the said forecourt would remain the same and unchanged as well?

[jeffrey]

Thank you jeffrey. Does that mean that the current payments for repairs of the said forecourt would remain the same and unchanged as well?
Yes. Nothing in the lease (e.g. covenants for payments re services) changes just because reversion is transferred.
Transferee must however ensure that Transferor hands over, on completion, appropriate payment authority for Transferee to produce to lessee when demanding payment.

[allewitor]

If I severe the land on the side of the property and then Lease it to somebody who purchases the original flat adjacent to it on a seperate Freehold to that of the flat, would they be able to disenfranchise me of the Freehold to the land?

[jeffrey]

I'm not sure that I understand your post.

A flat's lessee has the right:
a. [individual] after two years' leasehold ownership, to extend lease by 90 years; and
b. [collective] to join with other lessees in block to enfranchise.

The unity or splitting of freehold title at HMLR is irrelevant to these rights.

[allewitor]

I understand your response and I appreciate that the majority of qualifying tenants would be able to collectively purchase the freehold to the footprint of the building in which their flats are located. My proposal is to split the land to the side away from the original Freehold title and create a new Freehold just for the land. If I then create a Lease to the new Freehold piece of land would this then be open to be collective enfranchisement by the Tenants of the 3 flats in the adjacent building?

[jeffrey]

No. The lessee of the side land might have rights to it, but the lessees of the flats would not- it is not in their leases' freehold reversion.

In fact, you do not even need to split-up the freehold title. The inclusion of the side land and the flats land in a single freehold title at HMLR cannot give rights to the flats' lessees in respect of the side land- unless the leases give them such rights.

[asherb666]

Hi newbie here,

id appreciate some help to this question.

i own a large one bed flat suitable for conversion into a studio and a one bed flat, but i only have share of freehold, can i just go ahead and do it, or do i need the all the freeholders consent?

thanks in advance

[jeffrey]

i own a large one bed flat suitable for conversion into a studio and a one bed flat, but i only have share of freehold, can i just go ahead and do it, or do i need the all the freeholders consent?
You surely have more than just "a share of freehold". Do you not also have a lease?
Even if freehold reversioner (F) gives consent, bear in mind how you will need to separate the two parts. Preferably either:
a. agree with F to surrender your existing lease, in exchange for F granting two new leases (one per part); or
b. retain your existing lease but yourself grant two underleases (one per part).

[pdk]

You will need PP as you are creating another resi unit...

Good lcuk...

PETER

NOTE: Peter Kyte BSC (Hons) DipTP MRTPI CGeog FRGS is an official LandlordZONE Topic Expert… For more information on Peter D Kyte Associates and Enabling Projects please see the websites at http://www.enablinguk.com and http://www.development-seekers.com. Any advice given by Peter Kyte in this Forum is of a general nature only and should not be taken to be a final and binding planning opinion. Based on any initial advice given you are strongly advised to seek a further professional opinion, which may involve a site visit and a detailed analysis of the issues... For information on the sort of work Peter undertakes please see TRACK RECORD (http://www.enablinguk.com/track.html), WORKING WITH INVESTORS (http://www.enablinguk.com/ur-property-investors-planning.html), and PROJECT TYPES (http://www.enablinguk.com/planning-project-permission-appeal-UK.html)...

[neil.p]

I have purchased a property with a friend i will have the shop below and my friend the living accomadation above our solicitor has advised us that my friend shoul have the freehold and myself a 999yr lease does this sound the best way to split the propert.any advise welcome.

[jeffrey]

I have purchased a property with a friend i will have the shop below and my friend the living accomadation above our solicitor has advised us that my friend shoul have the freehold and myself a 999yr lease does this sound the best way to split the propert.any advise welcome.

Who paid price; was it 50% each? If so, better to have whole property in joint names (holding on Trust Deed which states that each is 50% tenant in common). That Deed should also provide whether one of you can force the other to join in a sale or whether unanimity is essential.

If upper and lower parts are about equal in value, you + other should then jointly grant two long leases (999 yrs.): one to you alone re shop part, and other to him alone re residential part.

[neil.p]

shop was one third of the total price.would that make a problem hope not as your way does sound better thanks.

[jeffrey]

shop was one third of the total price.would that make a problem hope not as your way does sound better thanks.

OK; so grant lease for shop at premium (price) payable by him to you which will balance-up the shares to 50-50.

[Shayneparker]

Hi all,

I'm looking for some adivce on title deeds. I have beed approved for 2 Buy to let mortgages on two flats that I already own.

The flats are currently in the same building on a single Freehold.

Now the mortgage company requires that I give them a separate title number for each flat.

I understand that it's not possible for me to have a set of leases drwan up and then grant them to myself.

Does any one know what my options might be?


Thanks in advance for any advice.

[jeffrey]

Hi all,

I'm looking for some adivce on title deeds. I have beed approved for 2 Buy to let mortgages on two flats that I already own.

The flats are currently in the same building on a single Freehold.

Now the mortgage company requires that I give them a separate title number for each flat.

I understand that it's not possible for me to have a set of leases drwan up and then grant them to myself.

Does any one know what my options might be?
Decide first in what name to mortgage the flats.
Two options:

1. Keep freehold in sole name. Grant leases to you + X. You + X mortgage these.

2. Transfer freehold to you + X. You + X grant leases to your sole name. You mortgage these.

In each case, there will be a new HMLR title number for each new leasehold. The mortgage of flat will be registered against this.

[Lawcruncher]

The flats are currently in the same building on a single Freehold

Now the mortgage company requires that I give them a separate title number for each flat.

Assuming you mean that there only two flats, there is absolutely no need to do this. Whoever is advising your mortgage company that it is necessary needs to be locked in a law library.

[jeffrey]

Assuming you mean that there only two flats, there is absolutely no need to do this. Whoever is advising your mortgage company that it is necessary needs to be locked in a law library.
I disagree. To mortgage each flat separately necessitates separate titles at HMLR- hence separate leases.

[relebats]

Hi I don't know which forum this should be in, but here goes.
I have recently bought and developed a house into 2 flats (with PP etc) and I have two tennants already in, I want to re-mortgage the propery using a BTL but find I need to mortgage each flat seperately this means that as I own the freehold I somehow have to grant myself 2 leases to get the mortgages
Has anyone any advice on the best way of doing this, especially if I can avoid having to pay stamp duty again (the flats are worth about 200k each)
Its the first time I've bought and let flats my other properties are small houses
Thank you

[Poppy]

Did you not research this before deciding to split the house?

Most people in your situation have the intention of selling the flats and granting two new leases to the buyers. Some people also sell the freehold to the incoming lessees.

Others keep the property and let the two flats without the need for further finance.

Difficult to say: you probably need to grant two leases to yourself with another party, so that the result is a different combination of owners that own the freehold and leases.

What is your long-term goal? To keep the whole property? To sell the property? To sell leases? To sell leases but keep the freehold? Something else?

Is the property currently mortgaged? Why do you say you want a buy to let mortgage?

[Moderator1]

Six threads on the same topic have been merged here.

[Richard Webster]

Quote:
The flats are currently in the same building on a single Freehold

Now the mortgage company requires that I give them a separate title number for each flat.
Assuming you mean that there only two flats, there is absolutely no need to do this. Whoever is advising your mortgage company that it is necessary needs to be locked in a law library.

I agree that in theory this is the case. Unfortunately it seems to be lender practice to treat each lettable unit separately. I can see no logic to it at all and can't really understand why lenders won't lend on a freehold house let as two flats because for one thing there is a smaller likelihood of no income coming in.

I have started a thread in the past on this as I haven't understood why people had to go to the trouble of granting leases to themselves and another, but this seems to be a mortgagee practice that defies logic.

There is also the interesting point that whilst making sure that the leases are in a different combination of names is the way of dealing with it if you have to have leases, and is accepted by mortgage lenders, I am not entirely sure it is sensible from their point of view. After all, if Freehold belongs to X and X & Y hold the leases and default and disappear, the mortgagee is left selling repossessed flats with X as an absent freeholder and that won't help saleability and mortgageability in the future.

If they have a mortgage on the freehold of the whole building they can sell that with no leasehold complications if the borrower defaults.

[relebats]

Hi Poppy, thanks for the comments
I didn't research it at all, I thought in terms of re mortgaging the whole lot, and didn't consider that there would be a problem.
My long term goal is to keep the freehold and flats and keep renting them out until I want to retire, keeping the freehold means I can re-issue leases when I eventually sell them to gain maximum return
There is no mortgage on the property as it stands but I want to release the money to buy some more properties to let out. BTL seems the easiest route unless you can point me elsewhere
Thank you

[Poppy]

My suggestion is to employ a whole of market mortgage broker to find a mortgage lender that will lend money on a freehold property that happens to be laid out as two lettable flats. See who makes you an offer.

I agree with Richard Webster that lenders seem to over-complicate matters. Trouble is, you want to borrow the money and may have to spend time seeking out an amenable organisation.

(Take note Richard Webster, Shayneparker’s sole post is more than a year old.)

Maybe one way of persuading a lender, is to borrow a low-ish loan to value percentage. Maybe seventy-five per cent.

[quarterday]

convey the freehold for nominal consideration to some friendly entity ie a £100 company, or a family member granting yourself simultaneously two 999 year leases at a nominal ground rent, then apply for the two requisite mortgages.........
then one fine day, once the mortgages are granted you can, if you wish, buy back the freehold.

[jeffrey]

convey the freehold to some friendly entity ie a £100 company, granting yourself simultaneously two 125 year leases at a nominal ground rent, then apply for the two requisite mortgages.........
But it's unclear whether this is needed at all.

[relebats]

Thank you Poppy, I'll try that