Free-flying freeholds need to be tied down

Updated July 2011

In English law, a freehold usually includes all the land below and all the air above a property. Accordingly two freeholds do not normally overlap. A flying freehold is where one freehold sits above another. This is usually for historic reasons, such as where archways provide access between properties, old properties are built over each other, or if there are cellars. These freeholds can create problems for both owners and buyers.

Why is a Flying Freehold a problem?

Where one property exists above another in the same building (such as in a block of flats) leasehold interests are granted to impose obligations regarding maintenance and repair of the structure of the building, amongst other things.

Flying freeholds are a problem as usually those rights and obligations have not been included in the conveyance. Rights which are needed will include those of support and protection and access to carry out repairs. In addition each owner should be obliged to keep their part in good repair and to insure the premises.

Resolving a Flying Freehold

There are several ways in which a flying freehold may be resolved.

Conversion to a leasehold structure

This involves the transfer of both parts of the flying freehold to single ownership, either in the joint names of the existing parties or to a company in the control of the two affected owners. Long leases are then granted to each owner containing the necessary rights and covenants which would be automatically binding on any future assignees of the leasehold interest.

Where there are established buildings or developments this is likely to be expensive and time consuming to put in place. It also requires the co-operation of both owners and their respective lenders but arguably it is the best solution.

Deed of mutual easements and covenants

This is the most common solution and also requires the co-operation of both parties and their lenders. The parties enter into a relatively straightforward deed which grants the necessary rights to each other and contains the relevant covenants.

The key concern with any arrangement is to ensure it is binding on the successors in title of each party. In English Law positive obligations on freehold titles, such as an obligation to repair, do not automatically bind successors in title to the original parties to the agreement.

Consequently each party must be placed under an obligation to obtain a deed of covenant from their future buyer in favour of the other owner to observe and perform the obligations contained in the deed. This can be protected by a restriction on a registered title to ensure that no sale can be registered without the consent of the other freehold owner, to be given if the requisite deed of covenant has been provided.

Indemnity insurance policy

There are a number of indemnity insurance policies on the market which aim to deal with the lack of adequate rights for flying freeholds. A policy should provide for an increase in the indemnity limit in accordance with property price inflation.
The main drawback with such policies is that they do not grant any specific rights themselves. They often exclude cover for structural alterations or a change of use, which effectively prevents any redevelopment or substantial improvements to the affected properties. Provision for this can be made in a lease or deed.

Access to Neighbouring Land Act 1992

This solution is of limited application but may assist if nothing else is available. If the correct procedures are followed, the Act permits someone to enter onto adjacent land in order to carry out works where they do not have the consent of the owner to do so. An application may be made to court to obtain an order granting access for repair (an access order).

The Court must be satisfied that the works are reasonably necessary for the preservation of the whole or part of the applicant's property and that they cannot be carried out or would be substantially more difficult to carry out without entry onto the neighbouring land.

The Court cannot make an access order in any case where the owner or occupier would suffer such hardship, interference with or disturbance to their use and enjoyment of their land that it would be unreasonable to make the order.

Using this method to deal with a flying freehold is a last resort. It is likely to be expensive and there is no guarantee of success. In addition it is not a permanent solution and an access order only covers works of preservation, so any alterations or redevelopment could not be the subject of an order.

It is important to consider the implications of a flying freehold early in the transaction. Where there are inadequate rights, many lenders will not accept the property as security or require the lack of rights and obligations to be rectified before lending. This inevitably cases delay and without the adjoining owner's co-operation, may mean the purchase cannot proceed.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2011. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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