What you need to know before selling a property with a flying freehold
Flying freeholds are reasonably common, but many home owners aren't certain about 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 when with a part of a freehold property lies over, or under, a part of another freehold property.
For example, your living room is beneath one of next door’s bedrooms, or part of your house extends over your neighbour’s garage. The flying freehold could also be a part of the building that sits above a shared alleyway.
So if you’re selling a property with a flying freehold, what do you need to know?
Does this make my house less likely to sell?
Generally, 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?
Neither you, or your neighbour, are under any legal obligation to maintain your property or even carry out essential repairs. As a result, any failure to maintain one property can impact the other.
For example, a leaking roof on the overlying property would put the underlying property at risk - yet the lower property might not be ale to enforce the repair of the property above. Situations like this are easier to deal with in a leasehold situation.
Most home owners are not usually given to allowing their property to fall into disrepair, so examples like the above are rare.
Flying freeholds can cause neighbour disputes when something something does need repairing; you may think that the responsibility for a given repair lies with your neighbour, they may disagree.
More commonly such disagreements a relate to cosmetic issues such as a refusal to decorate externally.
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 damage.
From your buyer’s perspective…
You may get on wonderfully 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 want to know whether there are access rights to your neighbour’s part of the flying freehold, in order that future repairs won’t be hampered.
How to mortgage lenders view Flying Freeholds?
This is the biggest risk to your sale falling through. Some lenders simply refuse to lend against a property with a flying freehold. Most lenders will lend, although there are often conditions.
For example, at the time of writing, the HSBC (the UK's largest lender) stipulates that they will lend providing that:
...there are mutual rights of support, protection, repair and maintenance and entry for repair and maintenance and mutually enforceable covenants, usually including a Deed of Covenant, being entered into in identical form on each dealing with the Property between the existing/other flat owners and the incoming purchaser.
It would be worth bringing the Flying Freehold to the attention of any prospective buyer as early 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.
Helpfully, the Council of Mortgage Lenders (CML) maintain a list of individual lender's criteria regarding flying freeholds here.
The solution is usually indemnity insurance
The mortgage lender will probably ask for an indemnity insurance policy to be taken out. This is typically paid for by the seller and usually 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 - in fact, there are many reason to do this and most solicitors work on a no sale no fee basis. You can then ask the solicitor for confirmation that a policy can be issues and include this information to prospective buyers up front.
By overcoming the flying freehold issue up front, the buyer, their conveyancing solicitor and mortgage lender should all be satisfied that your flying freehold doesn’t pose an investment risk.