Disclaimer
MFS are a bridging loan and buy-to-let mortgage provider, not financial advisors. Therefore, Investors are encouraged to seek professional advice.

Many property investors across the UK have likely thought about dividing a house into two dwellings. We notoriously have a housing deficit in this country. There’s simply not enough supply to meet demand. Especially in places like London and other big cities.
Turning a detached house into 2 semis, or some other version of house splitting, could go some way in resolving the issue. For many developers or start-up investors, taking this route could be easier than building properties from scratch.
But, obviously, dividing a house into two dwellings, or possibly even more, may be easier said than done. There are many considerations you’ll need to factor in, along with complications you’ll have to adapt to. To help you get started, we’ll cover some of the initial details you’ll need to be aware of.

How to legally split a property
From the outset, you’ll want to consult with several industry professionals to ensure you’re on the right side of the rules. Solicitors will be able to guide you on how to legally split property – are there any caveats in the deeds? What about freehold considerations? Do new leases need to be drawn up?
You’ll also likely need to attain planning permission. You might also need to contact utility companies about providing each new unit with its own electricity, gas, and water.
Architects will help ensure your new apartments meet minimum space requirements and the like. Designers can guide you on what’s aesthetically desirable in modern flats.
This is just an overview in what you will need to do to divide a house into two dwellings. You’ll want to prepare thoroughly before moving ahead with any projects. But, there are plenty of incentives in progressing with such endeavours.
Source: HomeOwners Alliance, HomeOwners Alliance, HomeOwners Alliance

Should you divide a house into two dwellings?
The stock of homes for sale was recently estimated to be down 33% year-on-year, according to Zoopla. The situation is more pronounced in the rental market. Hamptons recently found that the stock of homes ready to let is currently 46% lower than it was in 2019. Regardless of whether you’re looking at homeownership or tenancies, more options are needed.
You could help with these imbalances by creating more homes out of existing properties. By meeting this demand in the market, you’ll be able to expand your portfolio, and spread your bets.
Having multiple tenants or buyers may also provide somewhat of an insurance policy. If one tenant falls behind on their rent, or a buyer pulls out of making a purchase, you’ll at least have a separate asset to balance things.
Generally, having more homes to rent out or sell on could lead to higher revenues and yields. But beyond the practical elements of making the changes to the home, you’ll need to think about the potential costs or downsides.
Source: Urbanist Architecture, Urbanist Architecture, RICS

Tax implications & relief
At first glance, it may seem that by increasing how many tenants or properties you have will raise your tax costs. But, dividing a house into two dwellings doesn’t necessarily result in a doubled tax bill. You may actually be able to take advantage of a very specific tax relief.
Multiple Dwellings Relief (MDR) may be available to you. This is a tax relief for landlords who purchase properties with multiple dwellings, such as houses divided into flats, or buildings with several apartments. If you utilise MDR, you can cut your stamp duty liability, save money on mixed-use property, and more.
However, this is a complicated relief, and there may be steep penalties for those who misuse or abuse the rules. You’ll want to work with accountants and tax professionals to see if MDR – or any other tax perk – is available to you.
Source: UK Property Accountants

Your budget – costs and profits
You’ll also want to do your research on where’s best to invest. There’s demand for more housing across the UK. But some locations need more residential properties than others.
Student towns will likely be desperate for decent accommodation and HMOs. There are also more specific geographic considerations. London needs more homes. But this is probably truer in the hotspots of Kensington or Camden, than Canary Wharf or Lombard Street.
It’s also important not to lose sight of your budget. There’s little point going through with dividing a house into two dwellings if your project doesn’t make a profit.
Costs for converting a single dwelling into self-contained flats will vary greatly. They’ll be swayed by a huge range of variances, including the complexity of your design(s), the extent of the structural works, and the condition of the house being worked on. And of course, there are professional, legal, and statutory fees to pay – which will likely be higher in the Southeast of England than they will be in Wales.
While it’s difficult to find an average, Mortgageable believes that converting a structurally sound house, with existing kitchen and bathroom facilities, into flats could cost between £15-£25k. Obviously, if you’re working on multiple properties, mortgaged or not, this could stretch into the hundreds of thousands.
Source: Metro, Urbanist Architecture, Mortgageable

How can all this be financed?
Fortunately, there are a range of options available to you for dividing a house into two dwellings. At MFS, we have many specialist products specifically designed to aid with conversion or expansion projects.
Our permitted & light development bridging loans can allow you to get the ball rolling on costly renovation or conversion plans. They’re available for any changes you’re making, with or without planning permission.
We also have developer exit loans for those coming to the end of their development project. These cover the original development finance you secured with the funding, providing you with breathing space to finish last-minute works, work out long-term financial solutions, or find the right buyers/tenants for your new assets.
If your background is particularly complicated, our complex loans will help provide some clarity. We have no problem working with foreign national investors, corporate setups, or those with adverse credit histories.
If you want to move ahead with any new development projects, but don’t know where to turn for financial support, we may be able to get a bridging loan in place for you within as little as three days.
Development Exit Finance
A complete guide
Everything you need to know
- Benefits & costs
- Difference to development finance
- Application & loan process
- Repayment options