What is a Flying Freehold and what are its common problems?
If you want to give your conveyancing solicitor a stomach-churning moment, all you need to do is mention the term “flying freehold”. Discovering the existence of a flying freehold strikes fear into the heart of the most experienced lawyer because without mutual rights between affected adjoining property owners, it can leave both exposed.
What are flying freeholds and why do they cause such concern?
In simple terms, a flying freehold is part of a freehold property that is either built over a neighbouring property or reaches into it. The owner of the flying freehold owns what is termed as the “flying” part, but not the buildings or land beneath it.
Examples of flying freeholds include:
- An upper-level room which extends over a shared archway
- A balcony protruding over someone else’s land
- Property that relies on the support of an adjoining property such as those on steep hills
- A multi-storey building where the configuration of the rooms prevents a vertical division
Difficulties arise from the fact that without express agreement, each landowner has very limited rights in relation to the other’s land or property. For instance, they cannot compel the other owner to maintain or repair their property, even in cases where the flying aspect structurally depends on the other property, or where a flying aspect which is in disrepair risks harming the adjoining property.
In such cases, financing either property can be extremely problematic because lenders will want a property to have a clean title. Problems also arise where one owner cannot undertake works to the property because of difficulties surrounding rights of access, which can be limited. These problems are not one-sided as they affect both the owner of the flying apsect and the owner of the adjoining land.
The mortgage lender’s perspective
Broadly speaking, this is the biggest potential hurdle to straddle when it comes to selling a property with a flying freehold. There are some lenders with blanket “no-lend” policies towards flying freeholds, however, most will lend, although they may impose specific conditions.
At the time of writing, the table below shows the position on lending against a property with a flying freehold for different lending institutions:
|Lending position on a flying freehold
|Lloyds Banking Group
Yes, if only part of the title is a flying freehold
|Nationwide Building Society
|Yes, if only part of the property is affected.
No, if the whole of the property is affected.
|Yes, but will not accept Title Indemnity Insurance in certain cases
|Yes, providing it is possible to enforce positive covenants, although the Maximum Loan to Value (LTV) is restricted to 90%.
|Yes, providing the flying freehold affects less than 15% of the overall external footprint and adequate rights of support and mutually enforceable repairing covenants exist.
A buyer’s perspective
Although you may get on like the proverbial house on fire with your neighbours, a buyer could still have reservations about having to collaborate with whoever lives next door. The buyer’s conveyancing solicitor needs to clarify access rights to your neighbour’s part of the flying freehold, which should reassure them that future repairs won’t be hindered by an uncooperative neighbour.
What can be done if a property is affected by a flying freehold?
There are several options in the absence of express rights and obligations, such as:
- Title Indemnity Insurance – if there was any damage due to lack of repair of the adjoining property, and costs incurred due to prosecuting the owner, title indemnity insurance would cover the loss of value. Although it fails to resolve the fact, there are no rights of access and insurance is easily invalidated by structural alterations or redevelopment.
- A new mutual agreement (deed of covenant to vary title deeds)– this can be put in place between two owners, setting out reciprocal rights and obligations. The agreement will only bind future owners if they agree to be bound by it when they purchase the property. Such matters can be drafted into the agreement and reinforced by registering a restriction on the title deeds with HM Land Registry. The downside is that it can be time-consuming and costly to put in place, not least when there is little or no incentive for the non-selling owner to act quickly.
- Alternative structure – it may be possible to convert the flying freehold to an alternative legal structure, such as a leasehold. This has the effect of creating only one freehold out of which a long (999-year) lease is granted to the adjoining owner. This has the advantage of bestowing all the appropriate rights and positive covenants as part of the leasehold, and will not be affected by a transfer (sale) of the freehold or leasehold interests to other parties in the future. A lease can be expensive and time-consuming to draft, and there may also be tax implications, so unless you are knowledgeable in this area of law, you will almost certainly require independent legal assistance.
Access to Neighbouring Land Act 2002
Although under the Neighbouring Land Act 2002, property owners are granted the right to access neighbouring property in order to carry out repairs to their own property, it does not allow an owner to make repairs to their neighbour’s property. This can be particularly problematic if the adjoining property is causing problems for the flying freehold owner. It is strongly advised that buyers should not rely on this solution when considering purchasing a property with a flying freehold element.
The case for reform
Despite recommendations from the Law Commission in 2011 to revise the law of easements and the suggested introduction of the concept of a “legal obligation” which would make it possible for the benefit and burden of positive covenants to be enforced by and against subsequent owners, progress towards reform has been glacial and there does not appear to be any change on the immediate horizon. An announcement in the Queen’s Speech in May 2016 signalled the government’s commitment to bringing forward proposals regarding the recommendations within the Law Commission report, however it appears to have been kicked into the legislative long grass.
Can I get a mortgage on a flying freehold?
It is possible to get a mortgage on a flying freehold property, however, mortgage lenders tend to view it on a case-by-case basis, and largely depends on each individual lending institution’s policy.
Is a flying freehold a problem?
In most cases, flying freeholds cause no problems at all. Issues generally arise when a flying freehold property requires repair and there is a need for access to the adjoining property which is not contained in the title deeds. It may be possible to find a work-around such problems, using the solutions detailed above, however the decision to purchase a flying freehold should be made with caution.
How much is Flying Freehold Indemnity Insurance?
Most Flying Freehold Indemnity Insurance policies cost in the region of a few hundred pounds and are simply a one-off payment with no returning annual premiums to worry about. Obtaining flying freehold indemnity insurance doesn’t remove the issues we have outlined which flying freeholds bring to a property. It does however give some comfort by way of a fall back, in the event of future issues in this respect. Additionally, some mortgage lenders are happy to proceed with lending against properties where there is suitable insurance in place.
Who owns the land under a flying freehold?
A flying freehold is part of a freehold property that either reaches into, or built over, a neighbouring property. The flying freehold owner owns and controls the flying element, but not the land or buildings under it.
Will a flying freehold make a property less likely to sell?
Typically selling a home with a flying freehold should not pose a huge problem. They are not rare and generally do not cause a problem when selling a property with one, although lenders have their own specific criteria, which is likely to be the biggest barrier.
If you do find yourself either buying or selling a flying freehold property, it is sensible to ensure that both properties are under a mutual obligation to maintain and insure their part of the property. In addition, if works need to be undertaken, there is a way to compel an unwilling neighbour to contribute and assist. Finally, the importance of instructing a lawyer specialising in property law and/or conveyancer who can inspect and interpret the title deeds of the property cannot be stressed enough. They will then be able to advise you of your rights and obligations, and assess any risks associated with the purchase or future saleability of the property.