Leasehold Archives - Emyr Pierce

Sep 23

What is a Flying Freehold, and are there disadvantages to it?

The property which I am looking at has a Flying Freehold. What does it mean and are there disadvantages to it?

A Flying Freehold exists where part of a freehold property overhangs a freehold property owned by a third party.

While somewhat rare these days, such circumstances would arise where the first floor bedroom of one house overhangs either a lounge or kitchen on the ground floor of another property – or the first floor bedroom of the first house overhangs a pathway or alleyway between two houses belonging to the second house. More particularly, the situation can arise where an old country mansion has been converted into three or four separate units.

As these older properties were not necessarily constructed with first floor rooms precisely the same size as those on the ground floor if first and ground floor rooms are of inconsistent size it is possible that the first floor of one unit can overhang the ground floor of an adjacent unit.

The crucial issue in a definition of “Flying Freehold” is the word “Freehold”.

Those who live in flats will not see any difficulty in the concept of a first floor flat overhanging a ground floor flat in separate ownership. The crucial difference is that with a flat this will be Leasehold and the individual Leases of each flat will contain the various rights of support etc, which enables one property to exist above another in separate ownership.

Where one freehold property overhangs another, these rights of support will not be intrinsic in the legal titles to either property – hence the term “Flying Freehold”.

* Emyr Pierce is Managing Director of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email law@emyrpierce.co.uk

Nov 16

Do I need buildings insurance in leasehold flat?

I have been living in a new build apartments complex for the last 12 months, but have just been told by one of my neighbours that I don’t need Buildings Insurance as that is covered by the Management Fee. Is that right?

It probably is. In a leasehold complex of multiple units, whether it be apartments or flats, the obligation to insure will remain with the Freeholder who also has the responsibility of maintaining the building.

The cost of this is distributed proportionately among the tenants via the service charge. The service charge will include those contributions towards maintenance, repair and shared utilities as well as a proportionate contribution towards the overall insurance premium for insuring the building. Each individual apartment owner need only insure their own contents, fixtures and fittings.

You should also ensure that your mortgage repayment does not include any building insurance premium as this is already covered by the landlord and payable by you in the service charge.

Nov 26

Flat has 87 years left on lease

I am buying a flat which has 87 years left on the Lease. Is this acceptable or would I be safer if the Lease was longer?

Lease terms can vary substantially. Up until 10-15 years ago long residential leases were generally granted on a 99-year term. However, the increased demand for mortgages and the introduction of mortgage products for longer terms has brought pressure to bear on this length of term.

The problem is their acceptability to Lenders. The general principle is that the Lender will require a term of years left to run on the Lease of at least 30 years beyond the term of the mortgage. With a 30-year mortgage term this results in a minimum term remaining of 60 years.

However, some mortgage products are now granted over even longer periods of say 35-40 years to make them affordable to borrowers. In such cases you will see that a minimum Lease term requirement could be anything up to 70 years.

With a 99-year Lease this problem arises relatively early during the lease term, and the majority of existing long leases have less than this period to run in any event – resulting in the need for an extension of the Lease term from your landlord.

A term of 87 years remaining on your lease is, therefore, more than adequate as this will give you a minimum of 17 years before it becomes an issue with Lenders for mortgage purposes.

Oct 18

Buying a Freehold – does it make sense?

I am buying a Leasehold terraced property which currently has 75 years left on its lease. Would it make sense to buy the Freehold, or would that be a waste of money?

If you are looking to sell a Leasehold property with less than 70 years to run then it is possible your buyer’s mortgage company may insist on either the lease term being extended, or that the property is Freehold. You will, therefore, need to consider the possibility of either buying the Freehold or extending the Lease term once it falls below 65-70 years.

Buying the Freehold at an early stage has its benefits as the cost is only likely to increase. However, before parting with hundreds of pounds, you must appreciate that the only benefit to you will be the saving of a nominal annual payment in ground rent and the ability to insure with a company of your own choice.

The benefit, therefore, of buying the Freehold will usually be closely related to the remaining number of years of the Lease term. Provided you have owned the property for at least two years you are entitled to purchase the Freehold interest as of right under the Leasehold Reform Act 1967, but most freeholders will agree to transfer the Freehold interest without having to follow the strict procedure laid down by that legislation.

You should ask your Freeholder how much it might cost and, if necessary, take the advice of a Surveyor on any quote received.