In this blog, we will cover what a flying freehold is? if you can get a mortgage for a flying freehold and the conveyancing process of a flying freehold.
What is a flying freehold?
Freehold properties normally own everything vertically above them but in the case of a flying freehold, there may be an overlap over a freehold property which would then make ita flying freehold. There may be a hallway which overlaps over your property and connects to adjourning buildings. This is known as a flying freehold.
Getting a mortgage on a flying freehold property may be much harder than getting a mortgage on a freehold property as most residential mortgage lenders may be much more hesitant to lend as they don’t see a flying freehold as sufficient security for the mortgage.
When a flying freehold is present the property must hand above or lie beneath another person’s property. A flying freehold will usually refer to parts of the property that can be occupied so drain pipes, cables etc will usuaully not count as part of a flying freehold.
When a flying freehold is present you will usually need to have covenants in place which require either you or your neighbour to provide support and protection for the part of the property which overlaps and causes a flying freehold. Most mortgage lenders will lend on flying freeholds will want to see these covenants.
The covenants which should be present in a flying freehold are known as positive covenants as they require positive action such as support and protection.
These covenants do not run with the land and this means that future owners of the property are not bound to enter into these positive covenants by default. This is where mortgage lenders have an issue with flying freeholds as the positive covenant will have to be agreed before the purchase of the home and there is a possibility where the other party makes it harder to get the positive covenant in place.
Positive covenants do not require future owners to enter into them by default but negative covenants, on the other hand, require future owners to do the same.
If you are buying a property with a flying freehold you should instantly inform a conveyancer as soon as possible so they may begin to look into any risks this may bring and advise you accordingly.
In most cases, the positive covenants noted on the title deeds of the property do not bind successive owners and so your conveyancer will need to address this and may draft new positive covenants.
Your conveyancer will look to ensure that all the legal rights you need to have on your property are present. This will mean addressing who will support who and on what part of the property. By making this a contractual obligation to each party they will have to ensure their property is maintained to avoid it causing damage to their neighbour’s property. Your conveyancer will also put provisions within the positive covenant which allows you or your neighbour to enter each other’s property for any repairs. There may also be an obligation to ensure each party insures their side of the property.
When you have a flying freehold property you will usually not be able to register the property for commonhold purposes under the Commonhold and Leasehold Reform Act 2002.
You may also want to get a royal institute of chartered surveyor to carry out a property inspection.
Examples of a flying freehold?
“There is a passageway at ground floor level between two properties which is owned by Property A and the first floor of Property B extends over the passageway.
Property A has not kept the passageway in repair and due to subsidence Property B needs to undertake repairs.
Property B does not have a right to erect scaffolding on Property A or deal with the repairs without the owner of Property A’s consent. The owner of Property A is requesting a fee of £10,000 to grant access to Property A and for consent to the repair.
The structure of Property B, the integrity of the arch over the passageway and the safety of the people who use the passageway are all threatened.”
What issues can a flying freehold have?
The main issues with flying freeholds are that they will usually not have positive covenants which are structured properly and allow for successive owners to be bind by the positive covenants.
The Access to Neighbouring Land Act 1992 contains statutory provisions which could essentially make future owners bound to positive covenants to ensure that they can go on to their neighbours land to carry out repairs to their property.
In most cases, this is not the case and property owners or prospective buyers will need to renegotiate their positive covenants. You will also usually not be allowed to make changes to a neighbours property even if this affects your own property.
You will also usually need a court order to have frequent access to your neighbour’s property. This can be very time consuming and expensive and hence most mortgage lenders will simply not lend on flying freehold properties.
What is a flying freehold mortgage?
A flying freehold mortgage is a mortgage which is obtained on flying freehold property.
There should be covenants in place requiring the neighbour to provide support and protection for the hall and for the seller to provide the same for the bathroom.
These covenants are known as positive covenants as they require positive action, ie provision of support and protection.
As mentioned above, getting a flying freehold mortgage can be much harder than getting a mortgage on a normal freehold property.
Most mortgage lenders will not lend on a freehold due to the positive covenants which may affect the future value of the property and how easy it is to sell the property if it has been reposessed due to a mortgage default.
There are some mortgage lenders that will lend on a flying freehold property but this will usually be dependant on the size of the property and how much of the flying freehold element exists. You will also usually need a flying freehold indemnity insurance (ora title indemnity insurance) for most mortgage lenders to lend on a flying freehold. The flying freehold indemnity insurance will not sort the legal issues our or cover the cost of legal issues(in most cases) but it will simply provide funds to take care of any repairs costs which come about due to the flying freehold.
Can you get a mortgage on a flying freehold?
Yes, you can get a mortgage on a flying freehold getting but you should be aware of the implications which most mortgage lenders will place on you before they are happy to provide you with a mortgage offer for a flying freehold property. Using a flying freehold mortgage broker who has some experience of dealing with flying freeholds may be essential in getting a flying freehold mortgage as the mortgager broker may know which mortgage lenders may be willing to lend on a flying freehold property and what requirements they may have.
Most mortgage lenders will insist that the flying freehold element is no more than 20%( some will be as low as 10%) of the total gross floor area of the property, although some will allow it to be as high as 25%.
What should you look for when buying a flying freehold?
If you want to buy a flying freehold you may want to first ensure you have a reputable conveyancer who will be able to analyse the title deeds and any positive covenant which has been put in place to ensure it is sufficient enough and will not bring any future issues. The flying freehold must be mentioned and elaborated on the title deeds regardless of whether they are registered or not at the Land Registry, for both the overhanging and underlying properties.
The positive covenant must also allow you or your neighbour to enter into each other property for regular maintenance or repair. The positive covenants would also prevent you or your neighbour from making any changes to the property which may affect the structure of your home or making any changes which may change your home.
Problems mortgage lenders have with flying freeholds
Mortgage lenders will usually have issues with flying freeholds such as issues if the property doesn’t have a sufficient positive covenant. Most mortgage lenders will not want to lend if the fling freehold element of the property is above a particular size.
Most mortgage lenders will also ensure you have professional indemnity insurance for your freehold.
Must you have a flying freehold indemnity insurance?
Most mortgage lenders who lend on a flying freehold property will insist that you have a flying freehold indemnity insurance which will cover any structural costs involved with having a flying freehold property. Flying freehold indemnity insurance will usually not cost so much more than a typical house insurance policy. The flying freehold indemnity insurance will not cover any legal costs. The flying freehold indemnity insurance will provide you cover and financial compensation for any legal defects or omissions relating to the flying freehold element within the title deeds.
To get a flying freehold indemnity insurance you may need to use a specialist insurance broker.
Your conveyancer will advise you on the type of flying freehold indemnity insurance you may need.
Most mortgage lenders may insist on having a flying freehold indemnity insurance but in some cases, there are mortgage lenders who will lend even if you don’t have a flying freehold indemnity insurance.
Can you get a mortgage on a flying freehold flat?
It would be very rare to have a flying freehold flat as most flats are leasehold and not flying freeholds.This is because flat owners usually don’t have any rights to the land or to the space above their properties.
If you are looking to get a flying freehold flat you should speak to a mortgage broker who may be able to assist you in getting a mortgage.
What mortgage lenders offer flying freehold mortgages?
Below are some of the mortgage lenders who offer flying freehold mortgages but this list isn’t a definite list as most mortgage lenders will often change their lending criteria.
You should ensure you speak to your mortgage broker to get an up to date list of mortgage lenders who may be willing to lend to you.
Santander Flying Freehold Mortgage
Nationwide Building Society Flying Freehold Mortgage
Natwest Flying Freehold Mortgage
Mansfield Building Society Flying Freehold Mortgage
Ipswich Building Society Flying Freehold Mortgage
Converting a flying freehold to a leasehold
Converting a flying freehold to a leasehold is currently one of the best ways to avoid the flying freehold problem. It can be time-consuming and costly if not managed properly. Once a flying freehold has been changed to a leasehold a lease, both homeowners will have their freehold transferred to them and a lease of 999 years.
The long lease contains the necessary rights and covenants and is automatically binding on any purchaser of the leasehold interest, without the need for a chain of deeds of covenant or restrictions on title.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.