by James Cox
True Story – The gentleman was large, confident and amicable. He listened patiently whilst I explained why, given that he had not paid rent for two months he should move out. He sympathized with how he was causing me unfair expense and inconvenience. Whilst he acknowledged the logic in my arguments, he adamantly stated that I was incorrect – despite the fact that he no longer wished to pay rent, he did not need to leave ‘his’ apartment for another four out of the six months that it was ‘his.’
It was disturbing to be told by the town council that my tenant was correct. After two months of not paying rent he can be sent an official warning, two months later they would serve him with an eviction notice which would require him to leave within two months. In the meantime, should I fail to pay the mortgage, management fees or taxes the property would ultimately be confiscated. This made me question to what extent was the property ‘mine.’
Most property investors are familiar with the difference between ‘freehold’ and ‘leasehold’ and would choose the former given that there is a time limit associated with leasehold property. But the phrase ‘freehold’ is (perhaps deliberately) a little misleading and this is where the fun starts. Even if your house is freehold you are not the ultimate owner. Some legal history and etymology might be useful in order to explain further.