It's not a freehold flat!!

Macdon

New here so apologies if this is well-worn ground.

On our second mortgage application for a maisonette. We are buying the freehold of the whole building but occupying the upper three floors - the basement is owned on a long lease. There is no separate lease for the maisonette.

First tried Chelsea/Yorkshire directly. Admin droid raised no issues at application. Council of mortgage lenders website says nearly all
Lenders won't have a problem with this arrangement since it is distinct from a flying freehold and the attendant limitations in control/maintenance etc. Chelsea/ybs says it will lend to this arrangement on the CML website.

However, at valuation stage it was rejected by Chelsea's surveyors as a "freehold flat". This is despite sending all title documents from our solicitor. No reasoning with them so we moved on to Santander through a broker who assured us the freehold arrangement not a problem. We've now hit the buffers again due to the same valuation survey response.

Any idea what we're missing? Is this just some junior surveyor for the mortgage company thinking "flat + no lease on flat = freehold flat = bad" and ignoring the fact we're buying the entire building freehold? If so, does it nevertheless still represent a resale risk- if we are struggling future buyers may too.

Advice would be much welcomed - now several thousand poorer and at risk of losing property due to delays.

arcon5

Surely there has to be a lease somewhere??

anselld

arcon5 wrote: »

Surely there has to be a lease somewhere??

Not necessarily. It was probably originally a freehold building in single ownership and the owner created a lease for the basement and sold it off.

Now for sale is the entire freehold which includes the maisonette and presumably the freehold for the basement.

It is worth confirming this and confirming that it is not a flying freehold, but it might still make it tricky to mortgage. Was all this explained to the mortgage broker?

It would be more legal work but the vendors could get round this by creating a new lease for the maisonette and sell you both the leasehold flat and the building freehold separately.

Macdon

All correct Anselld, but puzzled why this should make a mortgage difficult - it's not a flying freehold and we would have full control of building.

May have to ask vendors to do as you suggest.

anselld

Macdon wrote: »

All correct Anselld, but puzzled why this should make a mortgage difficult - it's not a flying freehold and we would have full control of building.

May have to ask vendors to do as you suggest.

Guess in the event of repossession the mortgage co would not be able to get possession of the whole building due to the basement lease. Many lenders just cant cope with anything slightly unusual.

propertyman

Macdon wrote: »

it's not a flying freehold and we would have full control of building.

.

a flying freehold is another beast/problem entirely.

propertyman

it is a freehold flat in the sense that this is the box a lender puts it into.

One option is to agree, at your cost, for the vendor to grant a lease on the flat at completion AND sell the freehold in one go, as this is easier to raise a loan on.

Macdon

Thanks, propertyman, I think that's our only option if we want the property.

However, I'm told the lease would have to be issued before completion since there is no guarantee the repeat valuation would approved the mortgage.

Catti

I am selling a property in a similar situation for a client - they live downstairs though, and the upstairs is a separate Lease. Initially there were two freehold titles which we had to have 'merged' before a bank would accept it. But quite usual to have a freehold subject to a long lease of part. It sounds as if someone is explaining it wrong on the application forms.............

propertyman

Catti wrote: »

I am selling a property in a similar situation for a client - they live downstairs though, and the upstairs is a separate Lease. Initially there were two freehold titles which we had to have 'merged' before a bank would accept it. But quite usual to have a freehold subject to a long lease of part. It sounds as if someone is explaining it wrong on the application forms.............

I suspect that this may have been a Tyneside( other names as well) where each flat owns the lease to their flat and the freehold is split in two and each flat owns one of the freehold titles. Over the years ownership changes might have left the freeholder acquiring the other and surrendering their lease.