My flying freehold property is on the market.

1093frank

My wife and I own part of a Water Mill. 60% of the ground floor forms a flying freehold over a bedroom and storage rooms. The situation is well documented on the land registry which states who repairs what and outlines the party floors etc.

We had no problem obtaining a mortgage (16 yrs ago) but I am sure things are different now.
My question is. Most mortgage companies state a flying freehold of 25% to obtain a loan. Is this 25% just the footprint of the floor above the property below, because we have another two floors above this, are they part of the flying freehold?

As you can see this is not an easy one, maybe we will have to stay !!
Thanks for any reply.

Seanymph

Lloyds are lending on flying freeholds - and I think it is the percentage of the footprint.

wuls

25% of the floor area. The big guys actually don't have this restriction but take the advice of the valuer/solicitor (which really is more sensible anyway than a random 25%)

1093frank

Well it has been six months since we had an offer on our property. The buyer was refused by the coventry (which I expected), and then refused by two others, including the the Abbey (Santander). He then lifted his deposit to 30% of the value, and was still refused, although the Abbey never even got round to the valuation stage.
The purchaser was self employed in a medical profession and submitted certfied accounts, his mortgage adviser advised our agents he was well funded, but he was still refused.

The problem now is we do not know if the property is mortgageable by a high st bank, or could it be that the purchaser did not meet the required criteria.

Our agent now says there are no high st lenders who will lend on our property, only specialised companies.

Any advice or ideas would be appreciated.

Richard_Webster

The only way to deal with it is to have a mutually enforceable scheme of covenants with the owners of the property beneath. This means that neither property owner would be able to sell without making sure that the buyer entered into a direct covenant with the other owner. Restrictions on registration at the Land Registry without such a deed of covenant would protect the position.

Unfortunately this is difficult to do as the other owner will not see why he has to get involved when you want to sell your house - also if you have an unrelated argument with him he may refuse to sign!

RBS/Nat West seem to be prepared to lend on flying freeholds when this kind of scheme is in place.

Most lender will lend with an indemnity policy if the area involved is quite small but Santander have altered their policy and will not accept an indemnity policy even if the area is small.

hazyjo

Specify 'cash buyer only' on details? Auction?

Good luck!

Jx

Strapped

We have a flying freehold and had no issues getting a mortgage, with an indemnity policy, but the area involved is small. And to answer your question, yes, it is the % of footprint, but also yes the top floors are also considered "flying freehold" because you don't own the land they stand on.

1093frank

There are enforceable covenants covering both parties which pass on to any new purchaser, I do not know If the Santander viewed them but I must assume they did.
At the moment I and working through the CML lenders handbook to determine the possibles.

The property is valued fairly high so I do not think a cash buyer is going to easily happen, auction is a possibility, but any buyer would have to have their finance in place, (with whom)?

I am looking at a 999yr cross over lease arrangement, anyone got ideas about this!!

1093frank

A small addition to my last post. The Mill was split up in 1986 and the flying freehold covenants established at that time by firm of solicitors in Oxford. I am sure they could be made tighter now but I think they are relatively modern by most standards.

My thanks for your time.

Richard_Webster

There are enforceable covenants covering both parties which pass on to any new purchaser,

Do they? The whole problem with freehold flats - because this is virtually is a freehold flat situation - is that you cannot enforce positive covenants to do things such as carry out maintenance so as to support and protect the other part of the building against the other freeholder just because he owns that freehold. There has to be a direct covenant each time one of the flats changes hands between the buyer and the other flat owner every time either part of the building changes hands. The problem then is making sure that there is a legally binding obligation to ensure that that happens - usually there isn't that.

You could swap freeholds and grant each other 999 year criss cross/Tyneside lease - that would work but you have to get the other person to agree to do this.

It is most unlikely that Santander would have actually looked the legal wording - they would have left that to their solicitors to check if and when an offer was made.

1093frank

I has taken a few days but our legal advisor states that the covenants outlined in the property conveyance are legal and binding, and carry foreward to any future owner.
In his opinion they are also adequate and should not require amendments.
For us this is good news, it means I do not have to get the other party in the flying freehold involved in changing the conveyance.

We are putting the house back on the market again and intend to provide interested parties as much information as we can at the begining of the process to avoid unneccessary time and expense for both parties.