Q: We converted the top floor of our Victorian terraced house into a self-contained "granny flat" with its own entrance, for my widowed mother. The flat is a separate dwelling for Council Tax. Now that Mother has gone into long-term care and our children are at university, the flat is empty. We don't want the fuss of being landlords and responsible for repairs. Instead we wondered if we could we simply sell off the flat; and, as long as we keep paying the mortgage, is there really any need for us to go through all the paperwork and hassle of getting permission from the bank?
A: Answering your last question first, as the flat is part of the property mortgaged to the bank you will need permission for a sale. If a buyer needs a mortgage to fund the purchase and their legal advisors will need to check that you own the flat and are free to sell it: they will insist that you clear the mortgage from the flat. The bank may then insist you repay part of the mortgage with the proceeds of sale. So you might not see much capital return from your efforts in the short run, although you may free up some of your income.
You would still be a landlord, however, as a single building should never be divided into multiple freehold properties - sometimes referred to as "flying freeholds" or "creeping freeholds": this would cause legal problems and probably lead to the flat and the rest of the building being unsaleable.
Alternatively, you could sell the flat on a long lease or sell the whole building and take a long lease of the part where you reside. Before taking such a decision you should however speak with your Solicitor, who will be able to help you understand the implications.