Mortgages for whole blocks of flats
A block of flats on one freehold title, often called a multi-unit freehold block or MUFB, can be financed with a single buy-to-let or commercial mortgage. Lenders on our panel lend up to 80% loan to value on blocks, to limited companies and individuals, from a converted house of two or three flats to purpose-built blocks of 20 units or more. Every case is assessed individually and is subject to the lender's underwriting and valuation.
Aggregate value or block value: why it matters
A block can be valued two ways, and the difference often decides the deal:
| Basis | How the valuer works it out | Effect on the loan |
|---|---|---|
| Aggregate value | What each flat would sell for on its own, added together | The highest figure, so the biggest loan |
| Block value | What an investor would pay for the whole block in one go, usually at a discount | Typically 10–25% lower |
Many lenders only lend against the block value. On blocks of up to 10 flats, some lenders on our panel will lend against the aggregate value, case by case, where the flats are individually mortgageable and saleable and the valuer supports it. On a six-flat block worth £900,000 in aggregate, a 15% block discount is £135,000 of value, which at 75% is over £100,000 of borrowing. The calculator above shows the gap on your block.
Bigger blocks: lending on a yield-based valuation
Above 10 flats, lenders treat a block as an investment and value it on its yield: the annual rent divided by the return an investor would expect. A block letting for £120,000 a year, valued at a 7% yield, is worth about £1.7 million, whatever the flats would fetch one by one. Some lenders on our panel lend on that yield-based value, so a well-let block with strong rents can borrow more than a bricks-and-mortar valuation would allow. The yield the valuer applies depends on location, condition, tenant demand and the length of the rental history.
Split titles: turning one block into individual flats
Title splitting means granting a long lease on each flat, so every flat has its own title at the Land Registry while you, or your company, keep the freehold. It can unlock value and flexibility:
- Value: individually titled flats are usually valued closer to their aggregate value.
- Finance: each flat can be mortgaged on its own with standard buy-to-let lenders, or the whole block refinanced as a portfolio.
- Exit: flats can be sold or refinanced one at a time, rather than all or nothing.
The usual route is to buy the block on one title, often with a short-term bridging loan, split the titles, then refinance onto buy-to-let mortgages on the new values. Some lenders will refinance within six months on the new value once the split is done. See remortgage within 6 months on today's value.
Splitting needs a solicitor to draft the leases and register them, and it brings costs and obligations: legal and Land Registry fees, a management arrangement for the common parts, and buildings insurance for the block. New long residential leases must also carry a peppercorn (zero) ground rent. Take tax advice before splitting, as it can have stamp duty and capital gains consequences.
What lenders look at on a block
- The rent test on the whole block: the combined rent has to cover the interest by 125% (limited companies and basic-rate taxpayers) or 145% (higher-rate taxpayers) at a stress rate. Some commercial lenders look at overall debt cover instead.
- Each flat: self-contained, with its own kitchen and bathroom, meeting minimum sizes, and lettable on standard tenancies.
- Number of units: up to 10 flats, some lenders lend on aggregate value; larger blocks are usually valued on yield and often go to specialist or commercial lenders.
- Mixed use: a shop or office on the ground floor makes it semi-commercial, usually up to 75%. See commercial mortgages.
- Your experience: lenders often want some landlord experience for the highest LTVs, though not always.
Stamp duty on a block
Multiple dwellings relief was abolished from 1 June 2024, so most blocks now pay standard residential rates, plus the higher rates for additional dwellings. Where a single purchase includes six or more dwellings, it can instead be taxed at non-residential rates, which is often cheaper. Check the figures in the stamp duty calculator and take tax advice.
Frequently asked questions
Can I get a mortgage on a whole block of flats?
Yes. Lenders on our panel lend up to 80% loan to value on blocks of flats on one freehold title, to limited companies and individuals, subject to underwriting, valuation and the rent test.
What is the difference between aggregate value and block value?
Aggregate value is the sum of what each flat would sell for individually. Block value is what an investor would pay for the whole block at once, usually 10–25% lower. Lending on aggregate value means a bigger loan.
Do any lenders lend on the aggregate value of a block?
Yes, on blocks of up to 10 flats some lenders on our panel will, case by case, where the flats are individually mortgageable and saleable and the valuer supports the figure. Many others only lend on block value.
How are larger blocks of flats valued?
Blocks of more than 10 flats are usually valued as an investment, on their yield: the annual rent divided by the return an investor would expect. Some lenders on our panel lend on that yield-based value, which can suit well-let blocks with strong rents.
What is title splitting?
Granting a long lease on each flat so that every flat has its own registered title while the freehold is kept. Individually titled flats can be mortgaged, refinanced or sold one at a time.
Can I refinance after splitting the titles?
Yes. A common route is to buy on one title, split the titles, then refinance onto buy-to-let mortgages on the new values. Some lenders will do this within six months on the new value.
Is there stamp duty relief on a block of flats?
Multiple dwellings relief ended on 1 June 2024. A purchase including six or more dwellings can be taxed at non-residential rates instead, which is often lower. Take tax advice.