Here in the northeast, there are a lot of two storey buildings which consist of two flats, a ground floor flat and an upstairs flat. Each flat will have its own front and back doors, and there are no common areas in the building which are used by both flats.
Most of these types of flats are set up on what is known as a Tyneside flat arrangement. There are two different types of Tyneside flat arrangements, the North Tyneside flat arrangement, which is the most popular, and the South Tyneside flat arrangement.
In a North Tyneside flat arrangement, both of the flats in the building are granted leases which contain the same provisions, rights and covenants. There is a standard lease template which is commonly used. The leases grant each flat owner rights over the other flat to carry out maintenance works and rights over any shared access ways to the front and rear of the building. They also require each flat owner to insure their property in the joint names of themselves and the owner of the other flat.
The freehold title for the building is then divided into two separate titles. The freehold of the ground floor flat is registered to the owner of the first floor flat, and the freehold of the first floor flat is registered to the owner of the ground floor flat. This creates a crossover effect, and means that each flat owner is the other flat’s landlord, and they can therefore enforce all of the same rights and covenants in the leases against each other as and when required.
The leases are often granted for a term of 999 years. The ground rent is a peppercorn, which is of nominal value. The owner of the ground floor flat will be responsible for maintaining their flat and the foundations of the building, while the owner of the first floor flat will be responsible for maintaining their flat together with the roof and roof void. There is shared responsibility for anything like gutters, pipes and drains which service the whole building, so both flat owners would have to contribute towards any maintenance costs required.
The end result is that the owner of the ground floor flat will have two legal titles: the leasehold title for the ground floor flat and the freehold title for the first floor flat. At the same time, the owner of the first floor flat will also have two legal titles: the leasehold title for the first floor flat and the freehold title for the ground floor flat.
It’s really important for this arrangement to be kept up when either of the flats are sold to a new owner. There will be provisions in both leases to make sure that when the leasehold title for one of the flats is sold, they also transfer the freehold in the other flat to the new buyer so that the North Tyneside flat arrangement continues.
There are clauses in the leases called “attorney clauses” which are built in to help resolve any problems with transferring the legal titles should there be an issue, for example if one of the flats has been sold but the freehold in the other flat has remained in the original owner’s name instead of being transferred to the new owner.
This type of arrangement is sometimes used in other parts of the country, but it tends to be most common in the northeast. If you’re selling or buying a Tyneside flat, it can be helpful to instruct a local solicitor as they are likely to have come across this set up many times before and they know what they’re looking for.
Sometimes we do come across a South Tyneside flat arrangement. This is different because instead of creating the crossover effect, one of the flat owners will own the freehold of the whole building subject to a lease of the other flat. This means that one flat owner will have a freehold title, and the other flat owner will have a leasehold title for their flat. The outcome is that one flat owner is the landlord and the other is the tenant.
Although the lease will specify that both the landlord and the tenant have to abide by the same covenants and can enforce the same rights on each other, it doesn’t carry the same feeling of equality between the flat owners as the North Tyneside flat arrangement does. There is sometimes a ground rent payable by the tenant, though this is usually for a small amount each year.
Mortgage lenders tend not to like this type of arrangement as they view the owner of the freehold of the building as owning a freehold flat. Although this is technically not the case, sometimes lenders can refuse to lend as the arrangement does not match their criteria. If you do have a South Tyneside flat arrangement for your property, it is sometimes beneficial to agree with the owner of the other flat to surrender the current lease and to set up a North Tyneside flat arrangement from scratch.
Tyneside flat arrangements have been used now for many years and have been proven to be a great, workable legal precedent for this type of building. Although the concept can seem confusing at first, once you see it in practice it does all become clear.