How do you buy two flats?

We had two weeks to put our house on the market and accept an offer. In the end it took two days. An agent came round on the Monday to value it. On the Tuesday they had a call from someone looking for a house just like ours. They viewed it that evening and made an offer. I took this as a sign: we were meant to buy this house, because it shouldn’t be this easy to sell one. Our buyers turned out to be extremely patient too, which is just as well, given what came next.

Before we’d even viewed the house, I’d rung our mortgage provider to check we could port our existing mortgage. We had less than a year left on our fixed rate, but I was keen to hold on to it, because it was an elusive 0.99% and knew we’d never see that again. I was told we should be able to port the mortgage onto one of the flats and use the equity from our house to buy the other.

So rather than chase the mortgage straight away, I thought it was safer to get a survey done and see what we were letting ourselves in for. We found a local surveyor and had a Level 3 RICS survey done. We knew the house was in a pretty bad state, but we were still surprised by how many problems were flagged red. All the usual suspects were there: damp, dodgy electrics, a 30-year-old boiler, structural movement, chimney breasts removed without proper support, and a loft so full of stuff the ceilings were bowing under the weight.

The survey also advised us to ask for the planning and building control approvals for splitting the house into flats, and so began the back and forth between solicitors. The sellers’ position was that they didn’t need to provide planning approval, because the flats had been converted over 25 years ago and were therefore now deemed lawful.

We laid out the survey findings to see if the sellers were open to a conversation about price. The answer was polite but firm: they’d only consider it if something major came up in a structural survey, it was hard to negotiate while we didn’t have a mortgage offer, and the price already reflected the work needed. So they’d be reluctant to move by much.

Ok, I thought, we need to get this mortgage offer sorted so we can negotiate. We completed the application and had a phone interview before it went off to the underwriters. Then the bank called: they wouldn’t lend. I was shocked. The first reason given was that the bank was over-exposed in the area, it didn’t make sense as our current house was nearby. I made a complaint, and the complaints team came back with what felt like a lifeline. Since the refusal wasn’t within our control, they could either try to overturn the underwriter’s decision or waive our early repayment charge. Brilliant, I thought, we can make this work.

Then the bank changed its story. The underwriter had looked at the wrong policy, they said. The real reason was that we’d own two flats in one building, which was too risky for them. The technical term is “contiguous land”. No recourse, no argument, nothing we could do. We went from them saying they could help, to them saying they’d made a mistake, and that mistake meant they didn’t have to do anything at all. What a rollercoaster. But no mortgage.

Most people would probably have pulled out at this point, especially as not porting meant paying an early repayment charge of £18k on our five-year fix. Undeterred, I looked for another way. I applied to another bank for a mortgage on just one flat, the larger ground-floor flat with the garden, thinking it would definitely be worth half the price. The application went through subject to a valuation, and then they came back with a no: they couldn’t accept the property as suitable security “due to the extent of renovation work required”. They wouldn’t explain further other than to say, the conversion didn’t meet building regulations.

So we were in a catch-22. I couldn’t get a mortgage on the house because it was one, or on just one of the flats, because neither was considered up to building standards. I briefly considered a bridging loan, and very quickly changed my mind when I found out what it would cost.

Back to the drawing board. I didn’t want to give up, but I also knew that two declined mortgages and a shocking survey should surely be the ammunition I needed for a price reduction. No sane person could buy this house through normal routes.

I contacted a specialist mortgage broker for complex properties. He was confident we could borrow across both flats with one mortgage, on the basis that we’d return it to a single house. After two refusals I wasn’t overly confident, but this is what you pay specialists for. They talk directly to underwriters and get a feel for whether a lender is likely to say yes before you apply.

Then I started building our case. I had a bit of leverage, because we were buying and selling through the same estate agents, so I was clear that we’d only sell our house if we could buy this one. We instructed a structural engineer, whose report confirmed the need for intrusive work: replacing the rear supporting beam, rebuilding the front bay window, upgrading the chimney support and installing missing lintels (they’d removed them when installing double glazing). None of it was unsafe, but it was significant, and it was building on issues first identified in a report from 1992 that had never been fixed. I also commissioned an independent RICS valuation, which came back at £800,000, and it said outright that the price we’d agreed wasn’t supported once the condition and risk of no planning permission for the flats were taken into account.

I put it all together in an email to the agents: the structural report, the valuation, two mainstream lenders unable to lend, and the scope of work. I offered £810,000. It was the figure we felt genuinely comfortable proceeding at, and I was clear that if the sellers wouldn’t consider it, we’d step back from the purchase, and from our own sale.

We then had weeks of stalemate. The agents put our case to the sellers, who were furious. They felt we were accusing them of not having planning permission, and said they could sell the flats individually for more money. The agents, having been supportive of our argument, suddenly flipped: we could get a standard mortgage through their contacts, they said, and make it work.

We met them at the property, and luckily the story changed again. “Oh, I see why no one will lend.” The agent had finally cottoned on that this house was really a cash sale. The flats couldn’t be sold separately because they weren’t built to regulations. The boiler for upstairs was downstairs, and the ground-floor flat didn’t even have its own front door.

We ended up agreeing on £825,000. Yes, it was probably more than it was worth, but we’d come too far and were too invested to turn back.

The specialist mortgage with a small building society came good. They were very slow and had a lot of questions along the way, but what a relief. Third time’s a charm, I suppose. There was just one small caveat: we have to return it to a single house within 18 months, and under no circumstances can we knock through until we have approval to turn the flats back into a house - I was just happy to have a mortgage so would have agreed to anything.

There was something I couldn’t let go of though: the sellers’ insistence about planning for the two flats. So three weeks before completion, I requested a manual search of the borough’s planning records. You can pay the council to search the records for a particular property, and they’ll send you copies of anything they find. Lo and behold, there was nothing. Not a single planning record for the house or either flat.

So all the mixed messages and unclear answers from the sellers’ solicitors came down to this: the conversion had been done so long ago that, in their view, it had become lawful through the passage of time. It’s not quite as simple as that, and it turned out to matter a lot for us, but that’s a whole post of its own. I still can’t understand how they managed to create two leaseholds without proving they had permission, but maybe anything was possible 25 years ago.

Even then, buying it didn’t make it one house. Legally we were still buying two leasehold flats, and those leases will need dissolving back into the freehold. The council tax will need sorting with the Valuation Office too. But that’s all for later.

In the end, after months and months of back and forth we exchanged less than 24 hours before completing on 29 July, which I don’t recommend.

If you’re looking at something similar

• Get anything a lender tells you on the phone in writing. “Should be able to” on a call is not a mortgage.
• Get your own survey and valuation early. The independent valuation is what gave us leverage on price.
• Check the planning history properly. Online records don’t always go back far enough. Pay the council for a manual search covering the freehold and each flat, and do it early, not three weeks before completion.
• Buying one flat outright and mortgaging the other doesn’t change how a lender sees the building.
• If it’s a strange property, go to a specialist broker first, not last.
• Don’t be put off, there are ways around these problems if you are motivated enough.