Freehold flat

Sewing_Bee

My partner and I are looking to buy a flat which has the freehold for the whole house (3 flats in total). The current owner has lived there for several years so there is no issue with him having to offer share of freehold to other flats first. We like the idea of having the freehold as we would be looking to extend our flat and that would give us the freedom to do so as well as potentially selling the share of freehold afterwards to reduce our mortgage.

We need a mortgage of £150k (less than 50% LTV) and have applied through Nat West. Our solicitor said to make sure that our mortgage lender is happy to lend on freehold flats, our mortgage lender says to tell our solicitor to check that the freehold complies with Nat West conditions in the CML handbook.

We are going round in circles! Who do I badger to find out what conditions Nat West will lend under? A quick internet search says they will lend as long as it is less than 95% LTV but the internet tells me a lot of things.

We are looking to complete at the start of September so time is precious. Any advice on how to move forward would be very welcome.

Kynthia

Is it a freehold flat or is it a leasehold flat and you are also buying tge freehold for the whole building? Does your property have its own lease that you can read as it's an important distinction particularly for mortgage lenders.

G_M

Kynthia wrote: »

Is it a freehold flat or is it a leasehold flat and you are also buying tge freehold for the whole building? Does your property have its own lease that you can read as it's an important distinction particularly for mortgage lenders.

You can check here easily:

http://eservices.landregistry.gov.uk/www/wps/portal/!ut/p/b1/04_Sj9CPykssy0xPLMnMz0vMAfGjzOKNjSxMDA1NjDwsjM3MDTxN3dyNDUNMjQ1MjPWDU_P0C7IdFQG9k5Tz/

If there is a separate leasehold Title for each flat in the building, including yours, as well as a freehold Title, then you will be biying a lease AND the freehold.

Sewing_Bee

Thanks for the link, it is a freehold flat only with the two other flats on leasehold, both with over 120 years left. The building is a detached house so there should be no issue with flying freehold and our solicitor has just got the documents from the current owner so will be going through them in the next couple of days.

G_M

CML handbook
Part 1

5.7.1 If any part of the property comprises or is affected by a flying freehold or the property is a freehold flat, check part 2 to see if we will accept it as security.
5.7.2 If we are prepared to accept a title falling within 5.7.1:

• the property must have all necessary rights of support, protection, and entry for repair as well as a scheme of enforceable covenants that are also such that subsequent buyers are required to enter into covenants in identical form; and
• you must be able to certify that the title is good and marketable; and
• in the case of flying freeholds, you must send us a plan of the property clearly showing the part affected by the flying freehold.

Part 2 (NatWest):

5.7.1bDoes the lender lend on freehold flats?
Yes, provided the loan is less than 90% of the valuation.

Richard_Webster

I don't think GM is right.

They will be getting the freehold of the whole building subject to the leaseholds of the other two flatsd - the individuual flat will not have a separate freehold. This is a common cause of misunderstanding. I wouldn't class it as a freehold flat.

See 5.8.1 of CML - Nat West's view (and that of many other major lenders is set out below:

5.8Other Freehold Arrangements
5.8.1Unless we indicate to the contrary (see part 2), we have no objection to a security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases.

5.8.1 Does the lender accept security which comprises a building converted into not more than four flats where the borrower occupies one of those flats and the borrower or another flat owner also owns the freehold of the building and the other flats are subject to long leases?
Yes

This fits OP's situation and their solicitor ought to know it is OK - people in branches of a lender won't and if yout ell them it is a freehold flat they will get confused and a mortgage offer mya be turned down because wrong info has bewen given.#

I think Nat West is one of the few lenders that will consider a pure freehold flat - i.e. one where there are separate freeholds for each flat ina building - but that isn't the case here.

harrys_dad

Richard_Webster wrote: »

I don't think GM is right.

.

Oh no, my whole faith in this forum has just been shattered. Did G_M have too much cake? How can Richard Webster and G_M disagree? The world will now end.

G_M

It's not a question of how much cake I had, it's what was IN the cake....

Thanks for the more professional view Richard.