House Doctor: 'My prospective buyer is unhappy with my freehold. What should I do?'
Friday 18 February 2011
Question: The buyer of our terraced home is kicking up a stink because of a "flying freehold". She's never heard of them and wants us to significantly drop our asking price or – as requested by her solicitor – pay for an insurance policy against it.
We can't believe what a red herring this is, and want her to see there's no problem. Can you recommend any action, or should we simply buy this flying freehold insurance to move ahead with the sale?
Jan Elsen, Middlesbrough
Answer: You may see a flying freehold as little more than an irritation but it's no red herring – ignore it and you could struggle to sell your home.
A so-called "flying freehold" is a room or space inside a freehold property that stretches into – or over part of – a neighbour's house.
It could be an upstairs bedroom that lies directly above part of next door's downstairs lounge or above a shared outdoor passage.
It is very common with terraced homes and some semi-detached properties, and legally, says Andy Montlake at broker Coreco, "it means you won't own the land, rather you'll own the piece of property that is directly over the land".
Usually, it causes no problem to anyone and represents nothing more than a tiny administrative burden at the Land Registry where it must appear clearly on your title deeds.
But, as you've discovered, it can throw a spanner in the works.
If a water leak caused damage to the property covered by the flying freehold, for example, neighbours can refute the proposed shared repair costs. Or, if a planned property extension is likely to impact on their share of the flying freehold, they could refuse access.
None of this is a problem, of course, if you maintain good neighbourly relations but here's the rub (and the root of your buyer's concern): lenders don't like flying freeholds.
If a bath leaked in an upstairs bathroom that extended over a neighbour's front room, responsibility for damage repairs – especially when there's no insurance – can get murky.
This risk can put mortgage companies off, but the insurance policy suggested by your buyer's lawyer is a way around it. Known as a flying indemnity policy, it protects you – or your buyer – if any disputes flare up.
It'll cost no more than a couple of hundred pounds, and will keep your buyer and their lender happy. Keeping your sale on track will be worth it.
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