Share of freehold remortgaging problems

LozT

Hi

I am trying to remortgage my flat. It is a share of freehold with the owner of the downstairs property. As it is a converted Victorian terrace house, there are only two properties and having done research it was decided when we first took over the freehold that we wouldn't set up a company as most forums seemed to suggest this was only beneficial for properties that had four flats or more.

I am now trying to remortgage but the bank are saying they can't as the freehold is in the joint names or myself and the owner of downstairs. They are saying it's because the same person cannot be named on the freehold & leasehold due to it being a flying freehold.

Does this sound normal & is it just quicker/easier for me to set up a company with the downstairs owner, albeit a more burdensome option.

Thanks for your help!

Loz

minimike2

I think different terms are being mixed up here.

Is this an upstairs / downstairs where you each are freeholders / leaseholders of each other, or do you jointly own the freehold of the entire building, encompassing two dwellings?

amnblog

Having the same names on the lease and the freehold causes an issue with some lenders. Other lenders are OK with it.

Setting up a Limited Company to own the Freehold solves this problem.

The moral of the story - don't believe 'advice' gleaned from an online forum.

LozT

Thanks both!

In terms of set up I own the upstairs flat. As far as I am aware when I was purchasing both flats were leasehold and the lease was around 70 years. Due to the short lease we said to the sellers we wanted it extended before we would exchange. Instead of just extending the lease, the seller and downstairs then purchased the freehold and put leases in place of 999 years for the individual flats.

However the solicitor that the seller was using during this time was being investigated by the law society and was subsequently closed down, so hence the freehold ended up in joint names of the seller and the downstairs owner. When I completed the sellers name was replaced with mine on the freehold. So the land registry shows my name and downstairs name and the property address shows the entire house.

In terms of the leasehold on my flat I show on that document on my own.

I think in all honesty the reason a Ltd Co wasn't set up was due to the sellers solicitors being a bit shoddy, however downstairs are now selling and their solicitors don't seem to think there is anything wrong with the set up, it just seems to be the banks!

I did at one point think about seeing if I could afford to buy the downstairs flat, I spoke to a number of banks and they all said I couldn't for the same reason - because it would lead to a flying freehold. So I was very surprised to find it would cause me a problem to re-mortgage.

I hope that makes more sense!

Loz

TrickyDicky101

This is the banks not understanding - there is no flying freehold (unless there is something 'unusual' about the property such as an alleyway under the building or the building structure encroaching over another property's boundary).

You jointly own the freehold with the owner of the other lease and it is in both your names at the LR. There is absolutely nothing wrong with this ownership. The previous solicitor has not been 'shoddy' as you claim in this regard.

getmore4less

Does your current lender not have a suitable retention deal?

minimike2

Indeed this doesn't sound like any kind of flying freehold (my initial thoughts hence comments about the terms being mixed up).

If the setup is as I described, that you are freeholders / leaseholders of each other, then this is called a crossover lease and is acceptable to many high street lenders. The trick is finding a solicitor who understands them, as many do not if they have not come across them before.

Being in the North East I have seen this a lot over the years (Tyneside flats - purposely built and set up in this manner in order to give joint responsibility for upkeep of the building, thus lessening the risk to individual owners) but areas where they are uncommon the solicitors used to fall over at the first hurdle.

It also helps when the lender has a clear policy on them.


I still cant tell for sure from what you have posted if this is what the setup is - You need to clarify in order to be sure that this is what the setup is i.e is upstairs freeholder to downstairs and vice versa.


Also - What part of the country are you in? This is relevant because it may help to ascertain if it is an area where these types of property are prominent - There are pockets dotted about.