Quick question re shared ownership of a flat/splitting sale proceeds - can anyone help?

[DitaVonCheese]

Can anyone advise on this please?

Friend and I bought a flat together a few years ago. I paid the 10% deposit and then we split everything else (fees, mortgage etc) equally between us, except for the purchase of the freehold, which I also paid for.

We are now talking about selling and I just wanted to check the fairest way of splitting the proceeds. She thinks we should take EA fees etc off the sale price first, then I get the first 10% of the remainder, then we split the rest. Does that sound fair or should I get 10% of the whole sale price, then pay fees and split the rest? I think it actually only comes to a few hundred pounds but just want to do it the fairest way.

Also wanted to charge interest on the money I paid for the freehold - how do I calculate that?

I am a complete numpty at this kind of thing, in case it isn't obvious

Thanks in advance :)

Re the first bit - the fairest split would come from your friend's suggestion, as that way you are effectively paying a bigger share of the estate agents' fees, which seems appropriate as you've got a bigger share of the value of the sale (whereas under your suggestion, you would pay 50% of the fees, but get nearer 55% of the sale value). To be even more fair, you should take account of all the costs that you incurred between you when you bought the flat (solicitors, stamp duty etc) as if you split those 50:50 then your 10% deposit was probably less than 10% of the total cost of purchase.

The freehold bit is probably more complicated, as there is an inherent value in the freehold itself that may have increased over time, so arguably you should be paid according to its current value, as well as compensated for the amount you could have earned if you had been free to invest that money somewhere else. But leaving that complication aside, the simplest thing would be to agree an interest rate with your friend, and then use that, together with the amount you paid and the years since you bought it, to calculate interest. I'd imagine you'd only agree a couple of percent as an interest rate (at most) as rates have been so low for the past few years. So if you paid, say, £10k for the freehold 5 years ago, and agreed a rate of 2%, then the value of the freehold would be the original £10k plus 10,000*(1.02)^5 - which longhand means 1.02 multiplied by itself 5 times, and multiplied by the original cost. I make that just over £1k interest, plus the £10k, which would be £11k in this example.

Hope some of that makes sense!

That's really helpful, thank you so much :)