Which lenders for a large-ish flying freehold?

sam10

Advice please!

We're hoping to buy a three bedroomed house that has a large flying freehold, but are having real trouble finding a lender that will allow us a mortgage on the place. We've had an offer accepted, but our original lender has refused to lend.

The house has a cellar under it that is owned by a business. The cellar has quite restricted access (from a narrow lane), so it couldn't ever by turned into a workshop or anything noisy - it's just storage.

We estimate the cellar is underneath about 50 per cent of the property - which i know is a lot, but when you see the property you can see that it's not as big a deal as it sounds.

We need to find a lender that actually assesses each situation individually rather than using a blanket tick-box system that says no to every flying freehold.

Can anyone who has perhaps been in this situation recommend a lender, or a way ahead? We really don't want to let this property go!

Many thanks

1093frank

Hello Sam

We are now in a similar situation, or will be if we get a buyer!
Our FF is about 60% of the property. We did have a loan with the C&G but this was taken out 16yrs ago, and now paid off.
It was no trouble at the time and I do not see why it should be now if you have a good LTV (loan to value).

In Kent there are a lot of largish FF,s and it is quite normal.
Our friends bought an apartment in London with owners above and below (not cheap), I really do not see a difference !!

Anyway good luck, you will certainly get more for your money, and if it is of any use we have never had any kind of problem.

ps would be interested to know if you found a lender.

Seanymph

We have just sold and have a flying freehold - the buyer used Lloyds. There is another one who is happy with ff's but I can't think who it is.

I also had to take out an ' in perpetuity' indemnity policy.

wuls

Santander, RBS, Nationwide, Lloyds, HSBC (i.e. 80%+ of the market - the major lenders) all accept large flying freeholds subject to valuer and solicitors opinion. They do not restrict % per se but assess each on its merits.

I.e. the valuer will have to comment on the marketability and the situation (i.e. a flying freehold over a chip shop is much much worse than a flying freehold over a residential passageway), whether the property is in a prime location etc. I.e is this re-saleability acceptable or downright poor.

The solicitor will want to see rights and covenants in the Deeds. If you are telling me you have 50% flying freehold, and no rights of support or mutual covenants in your Deeds for the owner of the Cellars to maintain the cellars, I wouldn't want to lend on it and nor will the big boys. Indemnity won't be enough (certainly not for Santander anyway) in this situation, as any decent Solicitor will want at the very least all rights of support in the Deeds.

If you address the legal issues and your property is in demand (i..e in the South East/London), you won't find a problem. If you can't address the legal issues and you are in an area of stagnant, falling house prices etc, you'll have issues from them all.

wuls

I just noticed the cellar is owned by a business.

In this event, you are very unlikely to get a lender - as most indemnity insurances require the arrangements to be residential in nature.

Bottom line - most sensible, decent quality Flying freeholds aren't a problem for a valuer/solicitor, but above commercial, without covenants, is just a no go.

1093frank

Thank you for that information, and Sam too (not sure if I thanked him). We are a lot happier now about the general flying freehold situation. I think it is more in the general domain now thanks to information technology, the problem with that fund of information only negatives are aired, we like others are happy with the situation so are not normally vocal.
Anyway we are getting viewings, so maybe we will sell soon.

sam10

Thanks for all the advice so far - we're still had no luck in finding anyone who will lend.

Yes, the cellar is commercially owned - and that seems to be the stumbling block.
We did try to take out a mortgage with Skipton. Our broker had a contact at a local branch who was able to send a valuer out to have a look at the property 'off the record', just to see if it was worth our while pursuing. His opinion was that from a value perspective it was definitely worth the money, but that it just didn't meet normal lending criteria.

The trouble is that the valuer was from Connells - which, according to our broker, are used by the vast majority of lenders in this area. So, it rules a lot of lenders out straight away.

Thanks for the straight-talking feedback wuls, it seems you are right about the commercial aspect being a no-go. It's such a shame! Our conveyancer is good, and had advised us about how to make the deeds watertight to go above and beyond the cover that an indemnity policy would offer us.

I'll post again if a miracle happens and we find a lender... it seems like there may be others in our situation that would find it helpful.