Unequal Equity, what to do ?

Mike_1300

My partner and I have recently purchased a house between us. I own 2/3 and she 1/3. We’ve agreed that any expense that adds value to the house (e.g. a new kitchen) we will fund with a 2/3 – 1/3 split. What we can’t decide is how to split non-added value (e.g. stamp duty). Should it be 2/3 – 1/3 again or 50/50. We both want to do the best for each other. What does the panel think ?

ILW

Is this a business partner or a personal partner? Seems like the former from you post but not sure.

tizhimi

wow I'm not sure I could be so detatched and I'd end up spending more than my share!

lelole

I think that if this is a personal partnership and not business, then it entirely up to you on how you proceed - every couple I know have a different way of working things and each suits the individual couple.

If it were me, then I would be wondering about our commitment to the relationship if we felt we had to go into minute detail to ensure noone was "winning"...

Are you by any chance the kind of people who take a calculator with them when going out for a meal?

Lelole

laughingcow81

If you have split 2/3 to 1/3 so far, I would continue with that, saves on arguments later.

pie81

Think you'd better have it all split 2/3 - 1/3, for two reasons:

(1) because if she only gets to own 1/3 of the place, then fairness dictates she is only responsible for 1/3 of the expenses of owning a property - including the non value adding ones - such as stamp duty. (This doesn't apply to the expenses of living in a property, such as utility bills, which it's fair to split 50/50 as she is doing 50% of the living there).

(2) because it will be very arguable as to whether some expenses "add value". Eg what happens if the boiler breaks down and you need a new one? does that "add value"?

neas

If you buying a house together you pretty much shoving a big bag of money into a pot and what ever happens happens.

If you are going ahead with this on a personal basis (GF/BF etc) and are assuming that 1/3 of the value of the house would go to X and 2/3 would go to Y (if you split up).

Then every little cost to the upkeep of said property should be split in this manor 2/3 and 1/3... so you could justify slicing it that way at the end. It would be so much easier to just do things 50/50 tho lol.

getmore4less

If you want to keep the shares at some % then the following should all be in the same %.


Deposits
purchase costs
mortgage
Mortgage overpayments
capital investments
maintanence.

You can vary the initial investment if one of you has a bigger deposit and split the debt(mortgage) payments differently to ballance this up but this complicates things especialy if you plan to do any overpayments or when you come to sell.

If you come to sell you just split the net procceeds/short fall after costs in the same % no need to share selling costs that sorts itself out.

Keep running costs an day to say expenses seperate and don't try to trade these off in the future.

superfran_uk

Ummm... if it's your girlfriend and you're buying a house then you're buying it together, right? As a place to live, for the forseeable future, until you grow out of it? I don't quite understand the concept of dividing the equity now, as this should only be a problem if you split up... Why are people always so negative?! You never know, it might work out.

Gawd me and my bf just put all our cash in a joint account and learned not to squabble about silly stuff like who had more pints than who, or who bought more clothes. Guess we're old fashioned at 25?!

Soot2006

We put in differing deposit amounts - we have a deed of trust that if we sell house, we each get back out input and any profit would be 50/50. If house worth less, well, we get back proportionally what we can or owe (if neg eq) 50/50 ... We input 50/50 into all aspects of the house, although this is not strictly recorded on a balance sheet !

DVardysShadow

Easy. Mike you pretend to be 2 people, she acts normally as 1 person and you do equal share on everything always remembering how many people you are pretending to be.