Own a house with friend, she moved out and wants a lodger to pay her half of mortgage

Misschops

Hello,

I have jointly owned my mortage with a friend for a year now. She has recently moved in with her new partner and approached me by saying she is 'skint' and wants a lodger to pay her half of mortgage (my friend currently pays only for her half of mortgage- not bills).
I am wondering if you can tell me my rights- as I live in the property. She claims that if a lodger lived with me she would get the full amount from lodger i.e. £400 month straight to her... is this correct??
Am I right in thinking that depending on what we charge per month the lodger would be entitled to pay half of the bills primarliy (with myself paying the other half), then the money left over would be halved between myself and my friend??
A very awkward situation as my friend thinks she is entitled to full payment.
Id be grateful for your advice. THANK YOU!!

Browntoa

you can earn up to £4500 tax free from a lodger , I would tell her that you are prepared to do it but will only give her HALF of what is left over after her half of the mortgage and the bills are paid as you will be managing the lodger on her behalf ( you have the day to day problems)

Misschops

Thank you... I am right in thinking that bills are a priority to be paid before rent?

TrickyDicky

Misschops wrote: »

Thank you... I am right in thinking that bills are a priority to be paid before rent?

What good is a gas supply if you have no house to supply it to? Rent/mortgage should always first priority.

Misschops

Think you may have misunderstood refer to original news feed....

sleepless_saver

You'll need to check if you need your mortgage lender's agreement to letting, and your insurers.

Wutang_2

Misschops wrote: »

Think you may have misunderstood refer to original news feed....

Yes TrickyDicky - do as you are told!

Misschops

Yep mortgage lender has agreed

getmore4less

The principle is reasonable, you bought the place for 2 people to live in.

Claiming the full amount may not be.

There are two sets of costs, ownership and running.

The easiest(transparant) way to deal with this is to seperate the two costs.

All cost associated with ownership are pooled and shared between the two people that own the pace.(mortgage, maintanence, building insurance, capital improvements etc)

You set a fare rent for each occupant(based on rooms size what ever) as if it was 2 person house share.

The owners share that money.
Now actual real cash in is subject to tax so watch out for that(you only get 1 rent a room beween you).

Running cost are paid by the occupants.

You may want to do the lodger as bills included, so charge them a fixed fee you need to split the lodger money, problem with this is that the bills money is also taxable under rent a room).

Ditch_Crawler

Misschops wrote: »

I am wondering if you can tell me my rights- as I live in the property. She claims that if a lodger lived with me she would get the full amount from lodger i.e. £400 month straight to her... is this correct??

I'm not sure that you have 'rights' at all, in the sense that there might be some legal precedent which would set out how this situation should be dealt with in the eyes of the law.

But you have a moral right to expect your friend to stick to the agreement which the two of you made together.

That probably means that she should continue to pay her half of all the costs of owning and running the house. If you are happy for her to 'fund' her commitment by 'letting out' her share to a third party, then so be it - all of the 'rent' would go to her.

But it is you, not her, who will have to live with the third party...

I think the rent-a-room tax allowance applies to owner-occupiers, which your friend no longer is, so her tax situation may be complicated. Also, when the house is sold, your friend may be liable to capital gains tax on her share of any profit which is made, because the house has not been her main address etc. etc.

You are in a complicated and vulnerable situation, and, if I were you, I would be looking at ways of removing my friend from the equation altogether, rather than trying to accommodate her.

DC

tealady

I would consider buying her out, or sell the house giving her half the fees (after taking all the costs out plus some money for your time)