Categories: Legislation

Tyneside Flats – What are they?

Tyneside flats, what are they? They are a property development scheme in Tyneside. The main difference in these to other flats is the responsibilities laid out in the lease. A Tyneside flat appears from the front as a single fronted terraced house. However, there are two or sometimes three flats on top of each other. Each flat has its own separate front and back door and garden areas.

Construction of Tyneside flats started in the late 1800s as low-cost housing for a growing workforce. With separate floors and staircases, there is no relation between the lessees internally or externally. The backyard is divided in half. Originally each garden would have its own coal house and private outside toilets. It was an ingenious solution at the time for affordable housing. Now they make for profitable investments for landlords. The land was often sold on the condition that only properties with no more than two households could be built. Who enforces these rules now is unclear.

There are complications with the legal status of a Tyneside flat and the responsibilities between the landlords. The upper flat shelters the lower flat and the lower flat supports the upper flat. This has led in the past to specific legal schemes known as Tyneside flats cross or crossover lease arrangements. Under the Tyneside flat scheme, each tenant, even if holding the freehold of their own flat, becomes the landlord of the other. This allows the responsibility to be enforced without an external landlord or management company.

This type of flat ownership has come into context recently as part of the recent Law Commission leasehold reform. Another alternative to leasehold being commonhold which has also been considered. It is something to keep an eye on in the future as to what will happen.

How does it actually work?

The owner of a first floor flat will own both the leasehold title to their flat but also the freehold to the title, the ground floor will also have the same.

The property is typically a terraced house with two front doors usually side by side.

Each door leads to a separate flat and there is no shared entrance hall
The ground rent is a nominal value or no value such as a peppercorn
There is a criss-cross arrangement that operates on the basis of each flat being dependent on the other i.e. the right for structural soundness of each property to be physically supported and maintained by the other property
There are repairing responsibilities for the structure but these can vary widely, for example, the owner of the first floor flat may have repairing responsibility for the roof and the owner of the ground floor is responsible for the foundations. This is obviously not ideal and puts many lenders off. This has a criss-cross lease which enables the ground floor to enforce against the first floor on repairing covenants and vice versa. Enforcement extends to other complications too. A covenant is basically how the lease describes an obligation owed by one party to another. Examples of an obligation where the landlord has to insure the property for a leaseholder or for the leaseholder to obtain consent from the landlord for subletting.
There can be alternatives for these. The lease can state the repair and responsibility for the structure of the building are the joint responsibility. This would cover such parts of the building as roofs, foundations, joists, beams, and shared pipes, drains, gutters and electrical wiring in any other common areas. What would then happen is the costs of repairs of the shared facilities are usually split equally between the two flats.
You may also find that these leases contain a ban on any alterations to the building but alterations to each individual flat can be allowed with the consent of the landlord. That is the owner of the other flat. So if the first floor flat owner wishes to alter their property they need the consent of the ground floor owner. This can obviously cause a huge amount of problems.
You often find if a first floor flat were to sell the leasehold title they must also sell their freehold title on the ground floor at the same time.

Managing the building

The above is not a typical scenario and is very difficult for people to manage a building.

It is therefore not unknown for express provisions in the lease to require the first floor and the ground floor owners to:-

Produce a certificate statement of account for service charges.
Hold service charge funds in a trust account
Collect a reserve fund

In these situations, it may save time, effort and transparency for the two flat owners to hire independent third parties such as an accountant to do this. It is not absolutely necessary but it can solve a lot of disputes.

Alternatively, in the spirit of cooperation, the two flat owners may agree their own arrangements that suit their circumstances but this doesn’t necessarily apply to the lease requirements. If you then fall out it can be no end of a problem.

What happens if I fall out with the other flat owner?

There are various ways of dealing with a dispute. There is mediation or other forms of alternative dispute resolution which can be pursued in preference to doing litigation which can be a very costly and time-consuming process. A common provision in the lease is for disputes to be finally decided by a jointly appointed administrator. In the absence of any such agreement an arbitrator can be appointed then it would normally be the president of the Law Society, the Institute of Chartered Accountants or the Royal Institute of Charted Accountant to decide.

What is the difference between Tyneside leases and the wider law?

Tyneside leases are still also subject to the law on leaseholds such as:-

Reasonableness of service charges under the Landlord and Tenant Act 1985
The cost of items classed as service charges are open to a reasonable challenge in the first tier TribunaL
Lease extensions under the Leasehold Reform and Housing and Urban Development Act 1993. Although a more advantageous means of a lease extension would be to run voluntary arrangements. This would be where both flats would agree to extend each other’s leases for a term that they choose at no premium and split the legal fees between them. It should be noted that there may be tax implications when completing a lease extension and therefore you should seek legal advice as well as a specialist accountant. It is important that you look into exactly what is required when it comes to Tyneside flats as they are not easy.

How to Insure the building

The terms of the lease dictate the insurance arrangements. Previously there have been two methods.

These are as follows: –

The first-floor flat owner will insure the freehold interest of the ground floor as the landlord of the flat and vice versa. The lease may grant each flat owner the right to see proof of the current insurance policy. Or both owners may be required to insure the whole of the property in joint names and split the cost equally.

We now have a policy that covers this type of property, therefore, all the above is no longer required. Solicitors have in the past advised to take out a criss-cross lease indemnity that covers either party in the event of the absence of insurance. However, we now have the policy that you need. Speak to us about these properties and how to insure them.