What is a flying freehold ?
Conveyancing Solicitors are often asked to explain what constitutes a flying freehold, and why they cause problems for property owners, especially when it comes to selling a home.
To elaborate on what a Flying Freehold is: it is a part of a building in freehold ownership that is above another part of the same building in different freehold ownership. The flying freehold element does not need to be in mid air, it can be over a part of someone else's freehold, or over a communal area, for example a common passageway.
Example of flying freehold
An example of this would be a cellar which spreads out under the neighbour’s property or a terraced or semi-detached house where the dividing line does not go straight down the middle so part of one owner's bedroom is directly above a neighbour's lounge.
In the majority of cases the extent of any 'flying' part of a property is not a substantial part of a building, but occasionally larger areas are encountered, especially where an old building has been split up. However if the whole of one property lies above another then that is usually described as a freehold flat, which are dealt with in a separate article.
The problem with flying freeholds
Flying freeholds are notoriously unsatisfactory from a legal point of view. This is primarily due to the inability of one freeholder to enforce positive covenants against another, which has traditionally not been possible under English law. [see below for proposals for possible reforms. ]
All sorts of complex legal issues can arise regarding the cost of repairs, or major renovation, such as the cost of replacing a roof or foundations, or if your neighbours refuse access or protest at your plans or allow their property to fall in disrepair.
Ideally there should be some legal framework which obliges the current owner of each property to repair their part of the building, with appropriate cross-rights of support and access. This is unfortunately not always the case.
Ultimately the important questions a Conveyancing Solicitor must ask include:-
- What if the neighbouring property is not looked after and falls into disrepair?
- Is there a right to enter the property in order to maintain and repair the flying freehold parts ?
- Are there rights of support and provisions for insurance?
Practical issues with a flying freehold
In practical terms a flying freehold may not be a problem as neighbours do usually repair their properties and most people live perfectly happily with a flying freehold situation. If the state of the adjoining property is causing problems for your property, then the chances are the neighbour will want to repair it anyway.
Many sellers have been blissfully unaware that there was a flying freehold issue until they come to try and sell the property. Only then does the despair and frustration set in as the buyer, their lender and advisers give careful consideration as to whether they should involve themselves with such a problem property.
One practical way of sorting out the problem was that adopted by an owner who bought the next-door property and then rebuilt the two houses so that there was no longer any overlap. This did cause a few hiccups when one home was sold, as the legal titles had not be similarly adjusted, but once that had been done there was no longer any difficulty. However this is unlikely to be a possibility for most owners, and the best solution is to try and sort something out with the neighbouring owner.
Selling or buying property with a flying freehold
Most commonly the despair surfaces when you come to remortgage or sell your property. Mortgage lenders have various rules as to what they will accept, and some lenders will simply not lend where there is flying freehold. Many will lend if the area of the 'flying' part does not exceed a specified proportion of the total area of the building.
Some lenders require that the matter be referred to them before releasing the advance, and it will then be up to their underwriter to consider whether they will have adequate security. It is advisable to check with your proposed lender or broker before you spend too much money on application fees, surveys and conveyancing fees.
Borrowers should be aware that a Conveyancing Solicitor who is acting for the lender will be obliged to inform the lender of a flying freehold if that is required under his instructions from them. If the Conveyancing Solicitor is also acting for the buyer and the buyer instructs the Conveyancing Solicitor not to inform the lender, this will create a conflict of interest and the Conveyancing Solicitor may refuse to act any further.
Further information about lenders current requirements can be obtained from the Council of Mortgage Lenders website.
As the risk of sounding alarmist we would also point out that as lenders tighten their requirement in the midst of a credit crunch, the difficulties in borrowing money on flying freehold property may only serve to make such properties more difficult to sell.
Flying freehold indemnity insurance
Even if a lender will accept a flying freehold it will probably be necessary to obtain 'flying freehold indemnity insurance'. This is often easily provided by specialist insurers and shouldn't cost more than a few of hundred pounds. It will protect owners from having to shell out if any difficulties escalate into an expensive dispute with the neighbours.
Indemnity insurance provides financial compensation for loss or expense arising due to the flying freehold, but does not rectify the legal defect. It may not, for example, be possible to force an adjoining owner to carry out repairs to protect the property and whilst financial compensation is provided by the policy, the fact remains that part of your property may remain adversely affected.
Insurance underwriters require legal information before issuing these indemnity policies and so they must normally be obtained through Conveyancing Solicitors, who can advise on the precise extent of the cover. Once a policy has been issued it should continue to benefit successive owners and mortgage lenders without further premiums, but top-up cover may be necessary from time to time.
A glimmer of light?
The Law Commission published recommendations in June 2011 for legislation to simplify, modernise and enhance the law of easements and covenants. This would greatly assist the owners of homes where there is a flying freehold, but it remains to be seen whether the government will first accept the recommendations and then find parliamentary time to pass the required legislation.
Obtaining further advice
Specific advice must be obtained from a Conveyancing Solicitor who will require full information about the property title. Phone 0330 660 0286 to arrange for a Conveyancing Solicitor who can assist.
The contents of this article relating to flying freehold are intended for general information purposes only and shall not be deemed to be, or constitute legal advice . We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.