Solicitors Specialising In Extending Leases on Crossover Flats
What is a Tyneside Lease?
A Tyneside Lease, otherwise known as the ‘criss-cross scheme’ or ‘crossover lease’ is a scheme designed for developments where there are two maisonettes in the building.
Unlike a typical block of flats, there is normally no shared access routes. The building will commonly be a terraced house to front doors – ground floor will have a door leading into the ground floor property, and the second door will lead to a staircase leading to the upper property.
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How does a Tyneside Lease work?
A Tyneside Lease is used where a property is split into two self-sufficient maisonettes, with each owner being responsible for the upkeep and repair of their distinct maisonette. There are two distinct forms that a Tyneside Lease can take.
- North Tyneside Lease
This is the most common arrangement. The freehold of the entire building is split in two- one for each maisonette in the building. The owner of one maisonette, will own the freehold interest in the other one. So, for example, a top floor maisonette will own their own leasehold title for that maisonette, as well as the freehold of the lower maisonette, and vice versa.
This is done so that each owner can enforce the rules and regulations under the Lease of the other owner, for example the need to keep their respective properties insured and repaired.
Under this type of Tyneside Lease, the ground rent will be a nominal amount, known as a ‘peppercorn rent’ (which in reality is nothing). The Leases for each property will normally be on a 999-year term.
- South Tyneside Lease
Under the South Tyneside Lease, one maisonette owner will have the freehold to the whole of the building (and the responsibilities that come with it, such as insuring the whole building). Two freeholds are therefore not created – as in a North Tyneside Lease.
The owner of the other maisonette without the freehold will pay to the freehold owner one half of the costs for insuring the building, the maintenance of the same, and any repairs necessary.
There may also be a yearly ground rent payable to the freeholder from the owner of the maisonette without the freehold interest.
How do I extend a Tyneside lease?
As each owner is the freeholder of the other, voluntary agreements are often the most straight forward way to extend the leases. Under voluntary agreements, each maisonette owner can agree to grant the other an extension of 999 years for a nil premium (although tax implications can occur from this, so we always advise you get specialist tax advice on this point).
Alternatively, the statutory right to a lease extension is also available for these leases. This type of formal lease extension grants a 90-year extension to the unexpired term of the existing lease and reduces any ground rent to £0 (technically referred to as “a peppercorn rent”), provided the relevant criteria are met. So if, for example you have 60 years remaining on your lease,and you arrange a former lease extension – you will end up with 150 years to run on your lease.
Click here to read more about the difference between a private and statutory lease extension.
Where are these kinds of leasehold properties usually found?
Tyneside lease properties are predominantly found in the North East region of the United Kingdom, particularly in the area near the River Tyne including Newcastle, Gateshead and Sunderland.
Crossover leases like this started being granted in the 1860s and 1870s in areas such as Gateshead. This was done to provide affordable housing for a workforce in the region that kept growing larger and larger.
Outside the north-east, this type of ownership is most commonly found in maisonettes.
Most law firms outside of this area simply don’t know what a Tyneside lease property actually is because of this. However, we are an exception to this rule.
Our highly specialist leasehold extension team have extended something like 10,000 leases – and we regularly help clients who own Tyneside flats or crossover maisonettes with their lease extensions.
What are the advantages of a Tyneside Lease?
The main advantage of this system is that since each owner is normally the freeholder of the other, both parties can enforce the other’s covenants under the lease directly, without the need to refer the situation to an external landlord. This can save real time and energy for both parties.
Both parties can also feel secure by the fact that the whole of the building is covered for repairs and it is clear who needs to repair which aspect. The owner of the upstairs flat or maisonette will repair the roof, and the owner of the ground floor flat or maisonette will repair the foundations.
Are there any particular problems with buying a flat or maisonette under a Tyneside Lease?
A key disadvantage is that some mortgage lenders are not prepared to lend money on a property that is regulated by Tyneside Leases. Even if the lender is willing to accept this, they may impose stricter requirements than if it was a normal lease setup.
Why? That’s because if you buy a Tyneside lease with a mortgage, the mortgage will normally be registered against the freehold and leasehold interest.
Although it is common in the areas mentioned, in other areas of the country it can be considered a defective title due to the fact there are two separate freeholds of the same building, which can cause confusion and some issues.
What happens if there is a dispute between the two owners?
Since these kind of crossover lease properties often have just two owners, there is a real possibility of dispute – and deadlock if the two can’t come to an agreement.
That’s why many Tyneside leases contain clauses for any such disputes to be dealt with by an independent third party – often an arbitrator appointed by either the Presidents of the Law Society, the Royal Institution of Chartered Surveyors, or the Institute of Chartered Accountants.
What happens when one of the flats are sold?
It’s not always the case, but with crossover flats it’s very common that when one of the two owners sell their leasehold flat, they must also sell their freehold title in the other flat both at the same time and to the same person who is buying the leasehold flat for the nominal price of £1.
Typically, if the one flat owner were to sell their flat (the leasehold title), they must sell their freehold title in that flat at the same time and to the same person whom they sell their leasehold interest. It is common that the freehold interest is priced at just £1.