Julie's Boggle

This is probably something that isn’t particularly relevant to anyone else, but it seems a big deal to us, and it’s a uniquely UK phenomenon so I thought I’d pop in a note about it.

(Note: that the descriptions below cover my slightly flawed understanding of how it all works and, let’s just say, it’s not how Tom would have written it. )

For the people who don’t live in the UK, the freeholder of a property is the person(s) who, in theory, owns the building.  In practice, they control the external maintenance of the building and its insurance.

When a house has been sub-divided (like ours), the owners can get themselves a share-of-freehold (which is what we’ve just done); and while we still pay into the building maintenance and insurance funds, we do at least have a say in what gets done and when.  [South Africans might see this as a bit like a mini body corporate.]

For completeness, it’s necessary to mention that if you don’t buy your property as a “share-of-freehold” (we didn’t back in 2003), you become a leaseholder instead.  And it’s usually a bit cheaper.  In this case, you get issued with a lease (usually a long one) on the property, and — this is the scary bit — if it runs down to nothing, your flat goes back to the freeholder!

As a rule, people inevitably either extend their leases or buy the freehold before this happens.  And these days, the law tries to be fair to both sides, so the freeholder can’t refuse to sell or extend, but only if you come up with a price churned out by some-or-other special formula.

This formula is made up of number of factors and is quite tricky to calculate.  (Tom’s been figuring it out based on various things he’s found on the internet.)  One of the BIG factors though, is how much the property is worth, which is why we’ve been pushing to get it done now while property values are still quite low.

Something that stung us quite badly though, was the fact that we’d left it a few years too long.  In the interim, our lease had dropped below 80 years, which basically made our flat unsellable because no bank would give anyone a mortgage to buy it.   Coincidentally, the formula also nails you at this point by tacking on a big chunk of cash to compensate for the fact that the property isn’t worth very much without the freehold or a lease extension (funnily enough, the costs involved are not dissimilar!).

It was one of those “if only” moments, but we had to just shrug and move on.

Over the last six months we had a whole lot of to-ing and fro-ing with the other flat owner, and the previous freeholder (who owns the third flat), and our solicitor and his solicitor, just  in order to reach the point where we could conclude the deal — it took far longer than it should have!  But I can now report that the last, and most underwhelming step, in our flat purchase (of 2003) is finally complete — we are freeholders at last.