Have you found the perfect property to buy, only to find that it is ‘subject to a flying freehold’? As if property conveyancing wasn’t complex enough for the layperson, you may well wonder what fresh hell is this?
Thankfully, flying freeholds are few and far between but they can create problems for conveyancers, while mortgage companies may be nervous about lending on a property with a flying freehold element. I spoke to H&S Surveyors Ltd, established Chartered Surveyors in South Devon, for some advice and clarification regarding some of the issues surrounding such properties.
What is a flying freehold?
In English property law, if you hold a legal freehold title, you own the property including the land it is built on and the air above ‘all the way up to heaven and down to hell’. In this way, two freehold properties will not normally overlap. However, when it does, a flying freehold is invariably created.
For a flying freehold to exist, one part of the freehold property must extend physically into or over land or a building that does not form part of the property. The flying part of the freehold will typically overhang or project out from underneath, but this does not need to be in mid air.
Examples include properties where part of a bedroom lies above the lounge of a neighbouring property, or overhangs a common part. The most commonly seen example of a flying freehold is where there is a covered pathway or external passage running between two houses. If the passageway is owned by the property on the left but the upper floor of the right property extends over the passage, this is a flying freehold.
What are the issues with a flying freehold?
The trouble is that one person’s property depends on the neighbouring freehold owner for support and upkeep, and often the structural integrity of the building. From a conveyancing point of view, each property needs to have appropriate legal rights – the upper property must have the right of support from the lower one, while the lower property must have the right of shelter from the upper one.
As a consequence, the flying freehold owner must be able to rely on the neighbour to maintain his property so that the flying freehold property is not damaged. What if the neighbour fails to maintain his part of the building? What about building neglect, storm damage, roof collapse or redevelopment? There are genuine concerns for the owner of the flying freehold property that must be considered and dealt with via a Conveyancing Solicitor.
How easy is it to get a mortgage?
Obtaining a mortgage for a property with a flying freehold element will depend on several factors, and the attitude of mortgage lenders can vary widely. The reluctance to accept a flying freehold as a security for a mortgage comes from the existing risk that the neighbouring property may not maintain or repair the property, which may damage or prejudice the integrity of the building structure.
A mortgage lender is likely to want the flying freehold to have all required rights of support and protection, entry for repair and enforceable covenants that apply to the current owner (and any future owners) of the neighbouring building.
Some mortgage companies will lend if the proportion of the flying freehold element is small, often no more than 15%. Some will require a flying freehold indemnity insurance and some will refuse outright to lend on flying freeholds.
Whatever the situation, your Conveyancing Solicitor should be able to advise the best way forward. Even if you don’t require a mortgage to buy the property, dealing expertly with a flying freehold in the conveyancing process may well affect the property’s value and future saleability.
What is flying freehold indemnity insurance?
Flying freehold indemnity insurance is widely available and often required by mortgage lenders to cover the risk of any inadequate cross covenants and repairing obligations. If you do take out a policy, make sure that it provides for an increase in the indemnity limit in line with property price inflation. It is also worth noting that many policies exclude cover for structural alterations or change of use, effectively preventing redevelopment and major improvements.
Importantly, having indemnity insurance in place does not give the flying freehold owner the rights to ensure that the neighbouring property is properly maintained. If all else fails and a neighbourly resolution cannot be achieved, the Access to Neighbouring Land Act 1992 may be used to obtain access to the other property to carry out repairs to one’s own property, although it does not give you the right to carry out works to the other owner’s property. What’s more, it’s an expensive solution by way of a court application, and with no guaranteed outcome.
How to proceed
Encountering a flying freehold property will throw up extra challenges in the conveyancing process, but it need not be a deal breaker if dealt with properly. Make sure that the survey and/or valuation carried out by your Chartered Surveyor prior to purchase takes account of the existence of a flying freehold so that proper advice and recommendations can be given. Research the mortgage market fully to find a suitable lender and work closely with an experienced Conveyancer to address any issues with the legal title.
