August 2018
By Anna Tomasik and Tamika Chingandu – Legal Advisers at LEASE
What is a Tyneside lease?
A Tyneside lease, also known as a crisscross or cross-over lease is an arrangement where the leaseholder of each flat is also the landlord of the other flat.
Tyneside leases became common in the North East of England for workers near the River Tyne (Newcastle, Gateshead and Sunderland areas). This was partly in response to the need for affordable housing for an increasing working population following the industrial revolution. Although more common in the North East, this type of arrangement is also used in other parts of the country, in respect of maisonettes.
Common features
- Typically 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 of nominal value or no value, such as a peppercorn.
How it works
- The owner of the First Floor Flat (FFF) will own both the leasehold title to their flat but also the freehold title to the Ground Floor Flat (GFF) and vice versa.
- The criss-cross arrangement operates on the basis of each flat being dependent on the other e.g. the right for the structural soundness of each property to be physically supported and maintained by the other property.
- Repairing responsibilities for the structure can vary. For example, the owner of the FFF may have repairing responsibility for the roof and the owner of the GFF may have responsibility for the foundations. In this situation, the criss-cross lease enables the GFF to enforce the FFF repairing covenants and vice versa. Enforcement extends to other obligations too.
- Alternatively, the lease can state that repairing responsibilities for the structure of the building are a joint responsibility. This would cover such parts of the building as the roof, foundations, joists and beams, shared pipes, drains, gutters, electrical wiring and any common areas. The costs of repairs to such shared facilities are usually split equally between the two flats.
- The lease may 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 other flat owner. So, if the FFF owner wishes to alter their property, they will need the consent of the GFF owner.
- Typically, if the FFF were to sell their flat (the leasehold title), they must sell their freehold title in the GFF 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 £1.
Managing the building
- It is not uncommon for express provisions in the lease to require the FFF and GFF owners to:
- produce a certified statement of accounts for service charges
- hold service charge funds in a trust account; and
- collect a reserve fund.
In such situations, it may save time, effort and aid transparency for the FFF and GFF owners to hire an independent third party, such as an accountant, to do this.
Alternatively, in the spirit of true co-operation, the FFF and GFF owners may agree their own arrangements which suit their circumstances but still comply with the lease requirements.
Insuring the building
Insurance arrangements will be based on the terms of the lease. There are typically two alternative approaches:
- FFF owner will insure the freehold interest of the GFF as they are the landlord for this flat and vice versa. Where this is the case, the lease of the GFF may grant the GFF owner the right to demand from the FFF owner evidence of the current insurance policy for the GFF and receipts showing payment for the policy; or
- Both owners may be required to insure the whole property in joint names and split the costs equally.
A lender may also require its name to be added to any insurance policy for the building so that its security is protected.
Conveyancers often advise buyers of a criss-cross lease to take out Indemnity insurance to cover the risk of either party being uninsured or under-insured. This could arise in cases where, for example, the FFF has suffered damage by fire. The GFF owner should have insured the property under the terms of the lease of the FFF. If there was no insurance, or insufficient cover to rectify the damage caused, an indemnity policy taken out by the FFF owner could assist in covering the loss suffered.
Dispute resolution
Mediation or other forms of alternative dispute resolution should be pursued in preference to litigation, which can be costly and time consuming. A common provision in the lease is for disputes to be finally decided by a jointly appointed arbitrator. In the absence of agreement on who the arbitrator should be, an appointment can be made by one of the Presidents of the Law Society, the Institute of Chartered Accountants or the Royal Institution of Chartered Surveyors.
The wider law and Tyneside leases
Tyneside leases are also subject to the law as regards leasehold, such as:
- Reasonableness of service charges under the Landlord and Tenant Act 1985. Here, the cost of items classed as service charges are open to a reasonableness challenge in the First-tier Tribunal (Property Chamber). Application to the First-tier Tribunal
- Lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 . Although, a more advantageous means of lease extension would be by voluntary agreement. So, both the FFF and the GFF could agree to extend each other’s leases for whatever term 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. You should therefore seek specialist accountancy/tax advice before proceeding.
Take our Understanding your lease quiz, to find the parts of your lease that you would like to understand better.
Useful links:
Service charges and other issues
This article was published in Flat Living magazine in August 2018
