How to devide a property when the relationship is over?

nick323f

My partner and I are ending the relationship. I want to know how one divides the property.
We have no children and are not married.

We have been sharing a house, and mortgage for 4 years 7 months
Originally we bought a house for £125,000
I provided a £20,000 deposit (by re-mortgaging a property which I rent)
Since then we have managed all the bills, mortgage, electricity council tax etc, via a join account into which I pay twice what she pays. This was proportional to the income difference between us at the time.
The monthly mortgage bill has been £600pcm

She is not in a position to take on the mortgage herself but I am. So I think the simplest thing to do is for me to buy her out.

Now we have paid off £10,000 of the mortgage.
The mortgage company have the house valued at £126,800 (through index linking only).
We have done some work on the house, but it is not complete, a rough estimate is that it will cost a further £15,000 to get the house finished. I imagine that it would be very difficult to sell the house in its current state, no kitchen or bathroom and in need of a permanent roof in one area etc

I could calculate that the total amount she has contributed to the mortgage:-
4years 7months = 55months
One third of £600 = £200
Total paid buy her is £11,000

I could calculate one third of the equity in the house, not including the deposit which I put in:-
£10,000 + £1800 = £11800
One third of this is £3,900

I could get the property re-valued and calculate the equity based on this valuation. But would this be before or after the work was completed?

All the papers talk about house prices falling not rising so I wonder what the validity of a valuation is in the current market, and where to get a real valuation?

I would really like to know if there is a correct way to do these types of calculations. I am not looking to get the better of her, but also I do not want to give away more than I should do (at least not without both of us acknowledging that I have done so)


Thanks for reading this and thanks in advance for any advice

JodyBPM

I would think out of the two calculations that you have given, that the one third of the equity is fairest.

If you give her back all she has paid in, the she has effectively lived rent free for four and a half years, where as she would surely have been paying rent elsewhere had she not moved in with you.

Has she also paid in to the home improvements? In order to keep things amicable then perhaps I would also factor this in if she has.

It depends on how much you want to get this finalised amicably, and the state of your finances. I would suggest an offer of c. £5K would be very generous, perhaps, if you are eager to move forward with this.

pinkshoes

The house has increased in value by 1.44% since you bought it.

Your £20k deposit is thus now worth £20,288. (which is yours)

(£126800 - £20288) = £106,512

Presumably the mortgage is now £105,000 (as you put down £20k deposit on £125k property, and have paid £10k off).

So that's leaves an equity increase (after your deposit) of £1512, which you get two thirds of (£1008), and she gets one third (£504).

nick323f

pinkshoes wrote: »

The house has increased in value by 1.44% since you bought it.

Your £20k deposit is thus now worth £20,288. (which is yours)

(£126800 - £20288) = £106,512

Presumably the mortgage is now £105,000 (as you put down £20k deposit on £125k property, and have paid £10k off).

So that's leaves an equity increase (after your deposit) of £1512, which you get two thirds of (£1008), and she gets one third (£504).

The mortgage now outstanding is £95,000 as £10,000 has been paid off from the original borrowing of £105,000

But I see what you are saying about the increase in the value of my deposit.

JodyBPM - Yes I want to get this finalized amicably.
Yes she contributed to the improvements, but no where near as much as I did either financially or physically. However she did keep the house running during these periods and make sure there was dinner on the table at the end of the days work, does that count for anything?

From your replies I get the impression that my basic way of looking at this is not too far off the mark. Take the value of the property, deduct the amount outstanding on the mortgage, deduct my original deposit contribution, then divide the remainder (the equity) by the proportionate amount we paid into the mortgage.

Once we have agreed on an amount and this has been processed (i.e. the deeds transferred from our names to only my name, and she has received the cash amount we agree on) is that final or does she have the ability to come back and ask for more?

thanks again

Errata

Yes she contributed to the improvements, but no where near as much as I did either financially or physically.

Just a thought - you will continue to benefit from them after you buy her out, she won't.

DLT64

Is the house jointly owned ?

Orrin

Having been in a similar situation myself at one time, the advice I received was that the only thing that matters is who owns the property. If you are tenants in common the house would be disposed of according to your respective shares, and if joint tenants then split down the middle.

In my case I had used an inheritance to pay off a large chunk of the mortgage and had also contributed more to mortgage payments and bills over the course of the relationship. However, because we were joint tenants and unmarried I was told that a court would still divide the property 50/50. We managed to work things out amicably and I got most of my money back but if things had turned nasty I could have lost it all.

I recommend you get some proper legal advice.

Kittendreich

Are you still on decent speaking terms? If so, have you asked her what her ideas are for how it should be split? Then you will know what she is expecting and how this agrees / differs from you.

Jumping to getting legal advice might make it into a competative situation when it doesn't need to be. However, once you have made an agreement (however that is reached) I would get it legally recorded so that you both know where you stand in the future and neither of you can become 'forgetful' of what you agreed and feel they were unfairly treated and go "back for more".

Orrin

Kittendreich wrote: »

Jumping to getting legal advice might make it into a competative situation when it doesn't need to be.

Taking legal advice does not mean the situation has to escalate and there's no reason for the ex to even know he's been to see a solicitor.

I just think it would be wise in this situation to find out exactly what the legal situation is and if he wants to buy her out he'll probably need a solicitor to arrange it anyway.