What you need to know before selling a property with a flying freehold.
Flying freeholds are reasonably common, but many homeowners aren't aware of how they can impact the sale of their home. Here's what you need to know.
What is a flying freehold?
A flying freehold is a legal term used to describe a property where part of the building lies over, or under, a part of another freehold property.
Common configurations of flying freeholds include:
- a living room situated beneath a bedroom belonging to a neighbouring property.
- part of a property extends over a neighbour’s garage.
- part of the property sits above a shared alleyway.
- a balcony protrudes over land owned by another person.
Will a flying freehold make it more difficult to sell my home?
The property press has run various flying freehold horror stories over recent years. However, selling a home with a flying freehold is no reason to panic. Flying freeholds are not uncommon and do not usually pose a problem when selling a house.
What are the potential problems?
Grey areas over responsibility for repairs
There can be certain grey areas when it comes to legal responsibilities for flying freeholds.
For example, it may not be clear who is responsible for the maintenance of the flying freehold section of the property. A failure to carry out essential repairs on one property could impact the other.
For example, a leaking roof on the overlying property would put the underlying property at risk. Despite this, the owner of the lower property might not be able to enforce the repair of the property above. Situations like this are easier to deal with in a leasehold situation.
In practice, most homeowners don't let their homes fall into disrepair.
Disputes
Flying freeholds can lead to disputes with neighbours when something needs repairing. You may think that the responsibility for a given repair lies with your neighbour. They may disagree.
Disputes usually relate to cosmetic issues, such as disagreement over who is responsible for external decoration.
In the event that repairs are necessary, disputes can arise if one property owner refuses access to their part of the property in order to repair or assess the damage.
The buyer’s perspective
You may get on with your neighbours, but your buyer could still be concerned about having to collaborate with whoever lives next door.
The buyer's conveyancing solicitor will seek to clarify access rights to your neighbour’s part of the flying freehold, in order to reassure the buyer that future repairs won’t be hampered.
The mortgage lender's perspective
This is the biggest potential hurdle when it comes to selling a property with a flying freehold.
Some lenders simply refuse to lend against a property that has a flying freehold. Most lenders will lend, although there are often conditions.
At the time of writing, the UK's 5 largest lenders (by market share) have the following position on lending against a property with a flying freehold:
| Lender | Will the lender lend on a flying freehold? |
|---|---|
| Lloyds Banking Group | Yes, if only part of the title is a flying freehold. |
| Nationwide BS | Yes, if only part of the property is affected. No, if the whole of the property is affected. |
| Santander UK | Yes, but they will not accept indemnity insurance in certain cases. |
| NatWest Group | Yes, as long as it is possible to enforce positive covenants (e.g. a written agreement is in place to ensure maintenance, repair and insurance of the building and common parts are shared equitably amongst all residents). Maximum Loan to Value (LTV) is restricted to 90%. |
| Barclays | Yes, if the flying freehold affects less than 15% of the overall external floor area and adequate rights of support and mutually enforceable repairing covenants exist. |
Source: UK Finance Mortgage Lenders' Handbook
When should I tell the buyer about the flying freehold?
It would be worth bringing the flying freehold to the attention of any prospective buyer as early on in the process as possible. This will enable the buyer to check that their preferred lender is happy to lend, rather than discover this during the conveyancing process.
The solution is (usually) indemnity insurance
The mortgage lender will probably ask for an indemnity insurance policy to be taken out. The premium is typically paid for by the seller and typically costs a few hundred pounds.
Indemnity policies are usually proposed during the conveyancing process.
However, there is no reason why you shouldn't instruct a solicitor before you find a buyer. There are many reasons to start the legal process while you are waiting for a buyer. Most solicitors work on a no sale no fee basis so there is no financial reason to hold off,
Your solicitor can then review the title and decide on the best strategy to handle the flying freehold before a buyer is found. If an indemnity policy is necessary, a suitable policy can be identified in advance and offered as part of the sale.
