What are Tyneside flats?

In many circumstances when I've suggested investing in Tyneside flats to first-time investors, they've automatically assumed I mean flats in Tyneside generally. Whilst this type of property is common up in Newcastle, Gateshead and Sunderland, Tyneside flats are an actual type of property that can work well in your portfolio.

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Tyneside flats are commonly recognised as a single-fronted terrace houses from the outside. Internally, however, there are commonly two (or in some circumstances, three) flats on top of each other. Each flat has its own separate front and back doors, and garden areas whilst on the same plot of land.

Where did the concept of Tyneside flats come from?

Let’s rewind the clocks back to the 1800s. Workforces across the North East were growing, but the housing stock levels remained the same. Tyneside flats were seen as the perfect solution for low-cost housing, meaning more individuals could be accommodated in typical properties. Each Tyneside flat is designed to feature separate floors and staircases, with no relation between the occupants internally or externally. Each garden plot would be divided to give occupants their own specific plot of land; back then this would have come with a coal house and external toilets.

So how do Tyneside Flats actually work?

In the modern-day, Tyneside flats have arguably evolved into the hugely popular investment strategy of HMOs. With that said, however, the concept of Tyneside flats remains and can be beneficial to both your property investment strategy and your monthly income.

The land for Tyneside flats was often sold on the condition that no more than two households could be constructed. The enforcement of this condition nowadays however is rarely documented.

When it comes to the legal status of Tyneside flats, there are some complications; particularly when the responsibilities between landlords occur.

Ultimately, the upper flat shelters the lower floor flat whilst the flower floor flat supports the upper floor flat. Previously, this has instigated the creation of specific legal schemes known as ‘Tyneside Flat Lease Schemes’, or something known as a ‘crossover lease arrangement’. Under the Tyneside Flat Lease Scheme, each tenant (even if holding the freehold of their flat) becomes the landlord of the other.

This means that the responsibility has to be enforced without an external landlord or managing agent.

The ground rent is a nominal value or no value such as peppercorn.

What is the maintenance responsibility situation?

There are factors in Tyneside flats known as ‘common installations’, which serve between both flats within the single property structure. This means that both corresponding flat owners would be jointly responsible for maintenance fixes, including guttering, downpipes, gas and water pipes.

There are individual responsibilities dependent on the flat itself. The upstairs flat owner, for example, is responsible for ensuring the maintenance of the roof and the roof void in addition to their own flat. The downstairs flat are responsible equally for their own flat, but also for the foundations that the entire property is built upon.

There is a cross arrangement that operates on the basis of each flat being dependent on the other, such as the structural integrity of each property to be physically supported and maintained by the other property.

This cross-lease arrangement enables the ground floor flat to enforce against the first floor on repairing covenants, and vice versa. A covenant is essentially how the lease describes an obligation to owed by one party to another. An example of an obligation includes where you, as the landlord, have to insure the property for a leaseholder, or for the leaseholder to obtain consent from you as the landlord for subletting.

There can be alternatives for these, however.

A Tyneside flat lease can state the repair and responsibility for the building structure are joint between the flats. Parts of the building such as the roof, foundations, joists, beams and shared pipes, as well as drained, gutters and electrical wiring in any commons areas are covered by this form of lease.

This would mean that the cost of these repairs to shared facilities is split equally between the two flats. These leases can also contain stipulations that prohibit any alternations to the building, but allows for alterations to be made to each individual flat. If for example, the first-floor flat owner wishes to alter their property, then they would need the consent of the ground-floor owner and vice versa.

Typically, you will find that if the first-floor flat in a Tyneside flat were to sell the leasehold title, they must also sell their freehold title on the ground floor at the same time.

How do I manage a Tyneside flat?

Managing a Tyneside flat is not comparable to managing a typical residential property, not a usual apartment complex. As a result, it is not unknown for express provisions in a Tyneside flat lease agreement to require both flat owners to:

1. Produce a certificate statement of account for service charges.

2. Hold service charge funds in a trust account.

3. Collect a reserve fund.

Having an accountant in this situation can help to save time and effort on your part, whilst display total transparency between the two flat owners; particularly if a third-party accountant is used to do this. It can also aid to solve any disputes between transactions.

What are the differences between the leases for Tyneside flats and the wider law?

The leases for Tyneside flats are still subject to the law on leaseholds. This includes:

1. Reasonableness of service charges under the Landlord and Tenant Act 1985.

2. The cost of items classed as service charges are open to a reasonable challenge in a first-tier tribunal.

3. Lease extensions under the Leasehold Reform and Housing ad Urban Development Act 1993.

In addition, there is also the South Tyneside Flat Lease scheme; this also applies to individual flats in the same building. In this situation, one flat owner has the Freehold to the entire building structure and is also the one to insure it.

Meanwhile, the other flat owner is required to pay one-half of the costs for any maintenance and repairs that are required. They are also under an obligation to pay yearly ground rent to the other flat owner, typically around £20.

Are Tyneside flats a good investment?

Whenever I discuss Tyneside flats with fellow investors, many are surprised to hear that I have a number of them in my portfolio. Perhaps it’s the seemingly complex facade of the lease agreements and ownership that most investors find offputting, yet would happily take a seat at the HMO table.

But that is the very nature of property investment; if it was simple, everyone would be doing it. Where Tyneside flats have their own unique pillars, as do other types of property investments.

The main benefit to Tyneside flats is being able to essentially double the monthly income compared to letting a traditional terrace property on its own. Personally, I don’t mind investing the additional time and effort (across my entire portfolio, not just exclusive to Tyneside flats), so the returns are worth it for me.

If you are a first-time investor looking to find the best path for you, or perhaps a seasoned investor looking at broadening your horizons and trying out alternate methods, I’d be more than happy to chat with you about the logistics of managing Tyneside flats. Drop me a call or a text on 07494237716 and I’d be delighted to get some time pencilled in for a discussion.