My conveyancer says my property has a flying freehold?
  • 24th Apr 2019

In London there is high demand for, and limited supply of, property which means landowners and developers seek to make full use of space available. Residential property in London increasingly comprises flats, either purpose-built or converted. Properties that are built on top of each other (buildings divided horizontally) rely on others for support and/or protection; essentially one flat cannot exist without the other. When properties rely on each other they need interchanging rights and obligations to ensure neither adversely affects the other (and there is a remedy if they do). The legal structure that best preserves this is leasehold ownership. By contrast, freehold premises are normally only divided vertically so two freeholds so they not rely on anyone to exist. 

A Flying Freehold occurs if one freehold overhangs or projects onto another and so relies on another property for (some) support and/or protection. Flying Freeholds are usually found in older properties; when there has been a conversion of a larger property but the configuration of the rooms prevent a completely vertical division, where a flat is built above archways allowing access between properties or in cellars which encroach under another property. You can also find a flying freehold where a balcony extends above a neighbour’s garden or a property is built on a steep hill and may sit on another property for support.

Where two properties depend on each other they need the benefit of mutual rights and obligations to support and protect the other, coupled with the right to enter to carry out repairs and maintenance. These can be granted/reserved in the original conveyance, but under current property law the obligations cannot pass to a purchaser automatically when the property is sold. To perpetuate the obligations each purchaser needs to enter into a new deed of covenant to observe and perform the obligations. The chain often breaks down over time and can leave the properties unprotected.

Without the necessary rights and obligations in place a conveyancer will find it difficult to certify that the property is good and marketable title. This is of concern to lenders who can either refuse to lend on the property or will only do so if the flying freehold is a very small percentage of the floor area of the property (usually around 15%). If this issue affects your property, or a property you are looking to buy, what remedies are available?

The easiest course of action is to obtain defective title indemnity insurance which will cover any loss in value on account of damage by a neighbouring property’s default. However, the policy does not remedy the fact that there is a defect in the title, and you will need to exhaust all reasonable steps to remedy the problem with the neighbouring owner before making a successful claim. The policy can also often contain exclusions preventing structural alterations, so insurance will not be a viable option if there is an intention to develop the property. Some lenders will not accept insurance, so even if your current lender is happy, a future purchaser’s lender may not, which can make it hard to sell the property.

An inadequately protected flying freehold is a defect in the title of both the property and the neighbouring property, so it will be in the interests of both to cooperate to remedy the problem. Both property owners can enter into a deed of mutual covenant, granting each other the necessary rights and obligations. To ensure that the obligations are binding when either property is sold the deed should require that each subsequent purchaser of either property enters into a direct deed of covenant with the neighbour on the same terms. This obligation can be protected by a restriction on the registered titles of both properties to ensure no sales can be registered without compliance. This solution relies on each property owner being contactable and assisting in a timely manner; otherwise the issue could hold up any sale. It is also open to the two property owners to change the legal structure of their ownership to leasehold. Leases allow all the necessary rights and obligations to automatically pass to the new owner when the property is sold without the need for additional deeds (which is why they are used for flats). Of course, this is a large undertaking and requires both owners to transfer their properties to a single owner (usually a company under which both have shares) and take a 999 year lease of their respective premises.

The final option, if all else fails, not only does not rectify the problem but is long and expensive and has no guarantee of success. The Neighbouring Land Act 1992 allows a court to grant temporary rights of access to another person’s land for the purpose of carrying out basic prevention works. An order will only be granted for work necessary to protect, repair or maintain the property and not to carry out improvement works, an order will be refused if the neighbouring owner who suffer interference with or disturbance to their land to such a degree that it would be unreasonable to make the order.

In June 2011 the Law Commission suggested a new legal concept of “land obligation” which would allow positive obligations to automatically bind purchasers so that the covenants would not need to be perpetuated on every sale. The Government announced in a White Paper on 7 February 2017 that they intend to simplify the current covenant regime. A draft bill is currently in the consultation process and if brought forward into law would certainly make it easier to keep the needed obligations in place. However, until any changes to the law, where two properties rely on each other for support and protection, unless the flying freehold is a negligible percentage of the property, the two owners will need to have some form of cooperative relationship to ensure they have the protections and remedies they need.