Bought house with friends: Advice needed

el_leach

I bought a house with 2 friends 2 years ago. We are good friends and have known each other for 20+ years so we have no formal contract/anything in writing etc.

The house is 5 bedroomed and for the last 2 years the 3 of us have lived there and rented out the other 2 rooms when we could find tenannts.

The mortagage repayments are £1150 per month and all 3 co owners pay £450 into a joint account to cover this.

One of the co-owners is moving out to live with his partner but this payment arrangement will continue.


My question is what is the fairest thing to do about the rent of the now 3 spare bedrooms??

• Should we simply split all the combined rent 3 ways equally?
• Should the "mover out" get all the rent for "his" room?
• Should the "mover out" get all the rent for "his" room plus a third of the rent from the other 2 rooms?
• Not all the rooms we rent are of equal size or quality so command different monthly rents - how can we factor this in?
• If any of the rooms aren't rented how will this affect things?

We aren't looking to rip each other but we do have differing opinions over what the fairest options are. We would appreciate any independent advice on any of the above points from you guys.
Please get in touch if you think any more info would be useful.

If this is in the wrong place -lease let me know.

Thanks...

sims22

Personally I think it is fairer for the mover out to get all the rent for his room as he continues to pay for the mortgage, but no more. The other two have to live with the renters so they should benefit from the additional rent.

Ultimately though I think you need to come up with an arrangement all three of you are comfortable with.

Can I ask what you did with the rent previously? I assume you just split it three ways?

zzzLazyDaisy

The mover out should get the rent for 'his' room. plus one third of the rent for the remainder of the rooms let (this is on the assumption that each room is let for rent plus bills. If bills are included the 'mover out's share should be adjusted accordingly.)

Reason? The three of you own the house. The 'mover out' is continuing to pay his third share of the mortgage even though he is not living there. So the rent on 'his' share belongs to him.

Alternatively the remaining two could buy his share from him, and divide the rents between the two of you.

PasturesNew

I think it would be fair for him to receive all the rent for his room, then the usual share of the others. He will pay his £450/month regardless of whether his room is occupied or not.

However, the issue might be who puts in the effort to find lodgers - and what if he finds a lodger who turns up but fancies one of the other rooms instead.

Having 3 lodgers is something your insurance company might not like, check with them as the house might be uninsured with 3.

Another thing to think about is the cost of repairs, where is that money coming from. If he is not living in there he might not want to contribute to some repairs - and certainly not to improvements.

barnaby-bear

el_leach wrote: »

I bought a house with 2 friends 2 years ago. We are good friends and have known each other for 20+ years so we have no formal contract/anything in writing etc.

The house is 5 bedroomed and for the last 2 years the 3 of us have lived there and rented out the other 2 rooms when we could find tenannts.

The mortagage repayments are £1150 per month and all 3 co owners pay £450 into a joint account to cover this.

One of the co-owners is moving out to live with his partner but this payment arrangement will continue.


My question is what is the fairest thing to do about the rent of the now 3 spare bedrooms??

• Should we simply split all the combined rent 3 ways equally?
• Should the "mover out" get all the rent for "his" room?
• Should the "mover out" get all the rent for "his" room plus a third of the rent from the other 2 rooms?
• Not all the rooms we rent are of equal size or quality so command different monthly rents - how can we factor this in?
• If any of the rooms aren't rented how will this affect things?

We aren't looking to rip each other but we do have differing opinions over what the fairest options are. We would appreciate any independent advice on any of the above points from you guys.
Please get in touch if you think any more info would be useful.

If this is in the wrong place -lease let me know.

Thanks...

The way I see it the house offers two benefits
1) somewhere to live for those owners staying but not for the guy leaving - he's payign to live elsewhere but has his capital tied up
2) an investment where the benefit is the rental yield

If an owner is in a good room which would rent for more they are getting a benefit that lowers the yield of the remaining etc... what if no other rooms are rented, the guy not living there gets no benefit, what if only the guy moving out room is empty

I would ascribe a rent to every room including those occupied by owners. The mortgage costs are split 3 ways equally. The total rents for the 5 rooms including those owner occupied are then split 3 ways.

So if the owner occupiers pay £240 each in rent for a room and there are no lodgers the two living there will pay 450+240-(480/3) = £530
and the absent owner 450-(480/3) = £290