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2nd June 2021

What is flying Freehold?

Types of land ownership

 

There are two types of land ownership. These are freehold and leasehold. Freehold ownership is whereby a person owns everything found in the land and is free from the hold of anyone other than the owner. It is used for any purpose in line with the regulations. For leasehold property, one rents a property to hold it for a certain period and pays rent to the freehold owner known as the landlord. Although the tenant has a temporary right to hold the property, the leasehold property is considered their personal property.

 

Flying freehold ownership

This describes freehold properties that extend, hang over or protrude another freehold property. They tend to be found in large older buildings which have been renovated into smaller freehold properties. A better way to answer the question, “what is flying freehold?” is that it is a property that crosses over to its adjoining property.

This could be a property that extends over a shared ownership path for example or a balcony that overhangs an adjacent property.

To know whether a property can be referred to as a flying freehold is not as obvious as it may seem. Therefore, a potential buyer of property should inspect the property with the services of a surveyor and solicitor. The surveyor inspects the property physically assessing the section of the building that has brought about a concern. As for the solicitor, they will be the one to advise on the title deeds. The solicitors tend to be extremely cautious when dealing with flying freeholds. This is the case as from a legal point of view, dealing with such a property can be problematic raising complex legal issues. This is because there may be a lack of agreement between the two freeholders.

Several rights come along with owning such a property. These rights include rights of access, rights of support, and shelter. These rights are essential. The rights of access give you the right to access a neighboring property to carry out repairs. The rights of support and shelter protect the building that has a freehold that protrudes to the adjoining property. This is because the freehold owner of the other property may choose to demolish their structure without considering whether the fallen structure was acting as a pillar to the property that extends. If this happens, the foundation of the structure is weakened and compromised. You can know if a property has the rights mentioned above as they will be indicated on the title deed together with other rights and responsibilities that the freeholder is legally obligated to follow.

Where these rights are not included in the title deed, a Covenant and Deed of Grant can come in handy. Also, an indemnity policy can be considered a solution. The indemnity insurance covers property that either lies over or under a neighboring occupied property. This insurance will protect you against forcing your neighbor to offer support and protection for repair. The Covenant and Deed of Grant ensure that the correct covenants and rights have been noted and granted on the title deed. However, an agreement has to be made by both parties before being added and registered on both the parties’ title deeds. If possible, creating a deed that will also bind future successors of the property to the same terms will be helpful to them as they will have a much clearer understanding that will reduce their doubt, help them reassure the mortgage lenders they will deal with, and also help in their decision making of whether to purchase the property or not.

Another possible step to use is obtaining a court order under the 1992 act. The court orders carrying out the repairs to indemnify the owner against any damage, injury, or loss incurred during the repairs. The Neighboring Land Act 2002 gives property owners access to neighboring land to carry out repairs of their properties. However, it is advised not to rely on this solution when purchasing such property in the case of an unknown identity or unregistered land. Obtaining a court order will then be difficult. In addition, when it comes to legal matters, there tends to be uncertainties and costs involved.

Getting a mortgage on such a freehold property may not be easy but this doesn’t mean that it is entirely impossible. Some mortgage lenders may refuse to lend while others will lend on the condition that the freehold that is extended doesn’t go beyond the standard pre-determined percentage of the floor area covering the building, which is usually 15%, or a suitable indemnity policy. Also, other lenders may tend to change their offer or even valuation in such circumstances. Therefore, if you intend to purchase a property with the help of a mortgage, your solicitor must report to the lender if the property has a freehold that extends to neighboring property. Ensure you seek legal advice from both the solicitor and the surveyor on any future risks that may arise with such a situation.

At certain times you may tend to find that such structures get discovered when the property wants to be bought or sold. In such a situation, the lenders will want a guarantee that the property has the rights required and that the property is insured against any loss incurred or failure to carry out the needed repairs. When a lender decides to lend, it isn’t a guarantee that they will lend in the future.

When dealing with freeholds that in one way or the other cross over to your neighbor’s property, it is advisable to have legal advice through it all every step of the way as they will be more careful with the whole process, but you should also keep an open eye to everything that is going on. If you choose to sell your property, then potential buyers will experience the same challenges. This is especially when it comes to raising funds. Therefore, seeking the services of specialist lenders would be a good idea.

You might also want to consider changing your property from a freehold that extends to a neighbor’s property into a leasehold. By carrying out this conversion, the respective rights and covenants can be added to the new lease that lasts up to 999 years. It will also transfer interest to the new leaseholder. However, the downside is that the leaseholder can get fewer rights over the property and diminishing assets. This is greatly considered when transferring interest at the time.

The only problems that may tend to rise with a freehold property depend on various things. These include the relationship held between the adjoining freehold owners and the mortgage lenders. The problem arises where the mortgage lenders prefer not to lend to such properties or do so under certain terms or when the neighbors fail to agree. However, in most cases, such freeholds do not experience any problems.

One should seek the services of solicitors and surveyors to advise you accordingly when buying such freehold properties. Ensure that a reluctant neighbor cooperates when it comes to repairs and that both properties are obligated to each other when it comes to insuring and maintenance of the property.

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