Will My Building Society Lend on a Flying Freehold?

What is a Flying Freehold?

A Flying Freehold 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 neighbor’s property or a mid terraced house where the dividing line does not go straight down the middle as one corner of the loft space is directly above a part of the neighbor’s master bedroom.

What makes flying freeholds a problem?

Flying freeholds are notoriously unsatisfactory, primarily due to the inability of one freeholder to enforce positive covenants against another. It can prompt all sorts of complex legal issues regarding the cost of repairs to storm damage, or major renovation,100-105 dumps if your neighbours refuse access or protest at your plans or your neighbours allow their property to fall in disrepair. Ultimately the important questions a conveyancing lawyer 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 neighbors 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 neighbor will want to repair it anyway. We find that 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.

Selling a flying freehold

Most commonly the despair surfaces when you come to remortgage or sell your property as some lenders will simply not lend on a flying freehold. Some do lend but increasingly lenders do not like to lend on unusual properties. Many lenders suggest you refer to them; again it will be about how much of the property is flying, and how good the rest of the mortgage proposition is, i.e. good deposit or high income and credit score. 210-260 pdfIt is advisable to check with your proposed lender or broker before you spend too much money on application fees, surveys and conveyancing fees. At 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 then they’ll probably ask for a very common type of cover known as ‘flying freehold indemnity insurance‘. This is often easily provided by large insurers and shouldn’t cost more than a few of hundred pounds; it’ll protect you from having to shell out if any neighborly difficulties escalate into an expensive dispute. If a property lawyer/ conveyancer or the lender are not satisfied with indemnity insurance especially where the flying freehold looks like a major issue, you may run into demands for documents such as a ‘deed of access’ specifically allowing access in case of emergency, that must be agreed by all sides. Neighbors happy with a flying freehold for many years now face being asked to sign new, complex and costly legal documentation. That may put a strain on your relationship.

On the subject of flying freehold insurance, if you are purchasing a flying freehold, you should carefully consider the advice that your conveyancer gives you regarding this. Indemnity insurance provides financial compensation for loss 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.

You need to make an informed decision when it comes to the question of flying freehold indemnity insurance, we suggest that you talk to your conveyancing lawyer about whether the flying freehold insurance meets your needs and how the inability to enforce the repair of the adjoining premises may affect the property and it’s marketability in the future.

Examples of Building Societies who lend on Flying Freeholds and what their requirements are (as at February 2014)*

ASTRA mortgages conveyancing panel requirements :

Astra Mortgages will lend on properties where no more than 10% of the title is flying freehold and other mortgage instructions are met.If you have a “coach style” flat that is affected by flying freehold you need to contact:Customer Lending Department, DX29181, Lynch Wood. Telephone: 01733 372420

Newbury Mortgage Services Ltd

Newbury Mortgage Services Ltd will usually accept flying freeholds subject to satisfactory covenants and adequate insurance arrangements being in place. Conveyancing panel lawyers need to contact the Mortgage Underwriting Team on 01635 555700 to seek clarification in writing

Ipswich Building Society conveyancing panel requirements

Ipswich BS do accept flying freehold only if part of the title is a ‘flying’ or ‘creeping’ freehold. If the Offer conditions do not refer to a flying/creeping freehold please report to Lending Services (see condition A.12 of the BSA mortgage instructions)

Loughborough Building Society conveyancing panel requirements

Loughborough Building Society will lend on flying freeholds or creeping freeholds, where the floor area of the flying element is not more than 25% of the total floor area of the building to be charged.

West Bromwich Building Society

West Bromwich Building Society will accept flying freeholds, unless the part of the property affected by the flying freehold exceeds 15% of the whole.

*This is not a comprehensive list of mortgage companies who lend on flying or creeping freeholds. For an updated and comprehensive list please visit the CML Handbook and BSA Mortgage Instructions

This article was written by Simon Seaton Solicitor (non-practicing)

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