freehold and leasehold

[alanalbion]

We own the freehold title to a house which is arranged as 2 flats, which do not have separate leases. This means the house is not mortgageable in the present climate.
What's the easiest/cheapest way to get round this? I assume we'll need to draw up 2 leases, but we will then own both the freehold and the leases - ?

[buildersmate]

Well the freehold of the property would be mortgageable.
If the flats do not have separate leases then you must presumably be letting them on short-term tenancies of typically 6 months?
Having a lease of say 99 or 125 years on the upper or on both of the flats would certainty satisfy the requirement of mortgage companies (of having an asset - either freehold or leasehold for them to secure the mortgage on). That would then enable you to sell the flat (or flats) separately - if that is what you want. Yes, you would own both the freehold of the site, and the leasehold of the flats for a short time as you effect the transaction - then you'd sell on each of the leases. It depends what your long-term objective is for your investment.
You could probably obtain a mortgage on the property as it is (split into flats on short-term tenancies) but the lender would need to be one that accepted 'buy-to'let mortgages - which is what you currently have?
Finally, (depending how you plan to operate) you could consider just splitting the top flat off as leasehold premises - retaining the lower one with the freehold. This may be advantageous if say you lived in the lower flat.
You really need professional advice.

[alanalbion]

Thanks. The problem in the present climate is that the house is viewed as technically 'in multiple occupation' being 2 units without separate leases - of course it isn't, but any excuse will apparently do. I was hoping to avoid the expense of creating leases, and will continue looking for a BTL mortgage that will accept the present situation, as logically there's no real reason why they should not. However I may have to go down the leases route, in which case the freehold will be in my name, and the leases in mine and my wife's joint names - I think!