Flying Freehold Mortgages

A flying freehold mortgage refers to a home loan on a property with a section that overhangs or underlies the freehold of a neighbouring property (i.e. a room over a shared passageway). Lenders tend to be a little more cautious when it comes to applications on this type of property.

In this article, we’ll discuss the potential problems you might face in obtaining a mortgage and how speaking to the right broker can see you bypass those issues and get approved.

Can you get a mortgage on a flying freehold property?

Yes. These types of properties potentially present some legal issues as, in theory, the owners of the neighbouring property may refuse access for repair work or fail to maintain their part of the building.

This concerns some lenders even though, in reality, problems rarely arise as this would only occur if one party is happy to put their own property at risk of structural problems.

So, the good news is most lenders will accept mortgages on flying freehold properties. Typically, these are dealt with on a case-by-case basis according to the property in question.

Some providers put a maximum limit of the amount of total floor space taken up by the ‘flying’ element of the property (typically 10%, 20% or 25%). But there are plenty of lenders, including some mainstream ones, that have no maximum.

On the flip side, however, there are a handful of lenders who will not lend on a flying freehold property at all. This is where an experienced broker can be most useful by identifying the right lenders who can help.

Things to consider before you apply

There’s no reason why you shouldn’t buy a house with a flying freehold, but here are some key points to consider before you apply for a mortgage.

Covenants

Some will want to look closely at the exact wording of the title deeds on the property to satisfy themselves that the flying freehold element has been documented correctly.

They may also  want to check if there are appropriate covenants in place that provide the necessary access rights if and when repair or maintenance works are needed. This typically includes a condition preventing your neighbour from carrying out any works that might impact the structural integrity of your property.

It’s worth noting that any such covenant is made between the two individuals and not the properties. This means that you will need to agree or arrange a covenant with your neighbour-to-be before completion as any existing covenant will be nullified once the sale goes through.

The Law Commission asked for the legislation around covenants to be assessed and updated in 2011 but, to date, this process has not borne fruit.

The Neighbouring Land Act 2002

The Neighbouring Land Act 2002 gives property owners the right to access a neighbours’ property to carry out repairs to their own property. However, this would not protect you in the event that it is your neighbours’ home that needs to be repaired to prevent yours from suffering.

Indemnity insurance

Additionally, lenders will usually require you to take out flying freehold indemnity insurance. This is essential for you and the lender as it covers you for legal expenses and repair costs should the flying freehold be found to have faults. It usually costs between £100 – £200 and is a one-off payment that covers the term of the mortgage.

If this all sounds confusing, don’t worry. Your broker will guide you through the process and ensure the whole transaction runs smoothly.

How a broker can help you get approved for a flying freehold mortgage

We work with expert brokers who arrange flying freehold mortgages on a daily basis. They have deep knowledge of the market, understand each UK lenders’ attitude towards flying freehold properties, and can often access exclusive deals not available to direct applicants.

This means they will assess your circumstances and quickly identify the right lender for you. So, with an expert broker onside, there’s no need to worry about the added complexities of this type of borrowing.

If you get in touch we’ll arrange for a flying freehold expert to contact you directly and discuss your requirements in more detail.

Which lenders offer mortgages for this type of property?

In all, there are more than sixty mortgage providers that offer lending for flying freehold properties in the UK.

Mainstream lenders that offer this type of borrowing include:

• Halifax
• TSB
• Nationwide
• Natwest

Others will only accept applications via brokers.

These include:

• Santander
• Bank of Ireland
• Skipton Building Society
• Coventry Building Society

Some lenders only offer flying freehold mortgages on a ‘limited distribution’ basis. This means they have exclusive rates and deals to particular brokerages.

Remortgaging a flying freehold property

Remortgaging is usually easier as there will most likely already be covenants in place and you may well have an existing relationship with your neighbour.

If the connecting property is sold at any point, you should contact the solicitor you used when buying your home to ensure new covenants are put in place.

When you come to remortgage, you will still be limited in terms of the number of lenders you can approach. It will pay to speak to a broker again as they will be able to find you the best deal on a flying freehold mortgage according to your situation at the time.