A flying freehold exists where a part of one property extends physically in, over, or under a neighbouring property. The two buildings then depend upon each other for support. Where each property is held as a freehold, the flying element becomes a flying freehold.
See below for a comprehensive list of BTL mortgage lenders that lend on flying freehold properties.
There are also additional BTL mortgage lenders who will look at advancing money on a case by case basis making it difficult for a landlord to track down these products. Landlords should note that many buy-to-let lenders will not lend directly to them.
For more information on which buy-to-let mortgage providers will lend direct to a landlord have a look at the providers section.
The real source of difficulties with flying freeholds has been that although two neighbours may covenant to repair their own properties, once one of the neighbours leaves and sells on, an incoming purchaser cannot take advantage of the benefit and burden of the covenants agreed between the two previous owners and is not bound by the obligations assumed by the former owner.
The fact is that this arrangement puts off many owner occupiers and lenders. The result is that these properties therefore will sell at a discount to equivalent residential properties without this legal encumbrance.
What makes flying freehold properties attractive to residential investors is that once let, the gross yield from these properties is often higher than comparable properties in the area. This is because whilst the purchase price is less, tenants are unaffected and are prepared to pay the same rents as for unaffected properties.
Therefore, once a landlord gets their head around the fact that a residential investment property has part of its accommodation over a neighbouring property, a flying freehold residential investment property can be worth considering.
Astra BTL from N&P
Bradford & Bingley
Bristol & West Mortgages
Cheltenham & Gloucester
Leek United BS