Shared house ownership, room rent dispute – What’s the logical solution?

may_fair

Each joint owner pays half the mortgage and half the bills. Each JO 'owns' two bedrooms. JO1 lives in one of his two, and rents out the other. JO2 rents out both his rooms.

So JO2 should get 100% of the rent for his two bedrooms.

Whilst JO1 will be getting less rent, he's also enjoying the benefit of living in the house, whereas JO2 will be paying to live elsewhere (presumably).

chewmylegoff

Just in case you aren't aware, if you get a third lodger in then the house will become an HMO. If you have three or more stories then you'll have to get an HMO licence.

Jhoney_2

The best options would probably be to:-

a)sell and split profit 50/50
b)JO1 (live in landlord buy out JO2)

Anything else will be unreasonable (quite apart from money) to one or other's mind e.g a lack of roof-over-head commitment by JO2 to the property would become a bigger issue for JO1. Who finds, interviews etc potential tenants? What gets priority if JO2 needs the rent but JO1 (and perhaps other existing occupiers/tenants)do not want to live with any potential renters found?

As a Live-in LL myself, I would not be willing to do anything other than the options above. Anything else is a disaster waiting to happen.

Mortgage,Tax, HMO, H&S or any other obligation where the resident LL (or JO2) may be at risk of full liability in either's abscence, ability or refusal meet their responsibilities.

Jhoney_2

may_fair wrote: »

Each joint owner pays half the mortgage and half the bills. Each JO 'owns' two bedrooms. JO1 lives in one of his two, and rents out the other. JO2 rents out both his rooms.

So JO2 should get 100% of the rent for his two bedrooms.

Whilst JO1 will be getting less rent, he's also enjoying the benefit of living in the house, whereas JO2 will be paying to live elsewhere (presumably).

I know, but legally, wouldn't JO2 be entitled to a 50:50 share of JO1s rent if JO2's rooms remain empty and she began a claim to that effect? And the bank would come after the asset if there was a default etc etc. These and other things would worry me..like chasing contribution/reimbursement for essential or emergency house repairs.

Probably not worth the hassle if it can be avoided.

getmore4less

As well as the HMO issue if they go to 3 lodgers there is also

The CGT issue for two lodgers they already have.
The CGT issue is one owner moves out

jimjames

I would think the person moving out would be justified in retaining the rent for "their" room as long as they continue to pay all the bills that would be attributed to that room. If they are having to pay rent elsewhere then it seems rather odd to expect them to pay for 2 properties and split the rent received when they still have to pay the mortgage.

I agree with the post above that the remaining owner living there should have the say on tenant as they will be the one living with them.

Jhoney_2

That's the trouble, some think a 'managment fee', some think something to recognise the extra work/burden is appropriate, there is the concern about honouring the financial commitments and obligations, fairness - really differing opinions = messy.

Even in writing, things changed for one of them and wasn't anticipated by either in their formal arrangment. 'If' and 'as long as' wouldn't be rocking my world at all! Maybe i'm a chicken but it's a pretty big gamble, IMO.

Hope it all works out though.

Jhoney_2

Looking at it from a purely financial angle, the 50:50 ownership remains and the rental income/tax is similarly shared so 50% of 3 rented rooms each would be my expectation.

Interesting post, OP.

dippy

Jhoney wrote: »

Looking at it from a purely financial angle, the 50:50 ownership remains and the rental income/tax is similarly shared so 50% of 3 rented rooms each would be my expectation.

Interesting post, OP.

The financial angle would have to consider the enjoyment of a room rent-free by J02. Or would you charge J02 rent as well and then share all the rents 50:50?

Jhoney_2

Good point Dippy,

Forgot to add that live-in JO pays JO2 50% of going rate for the room they continue to occupy (the other 50% would be theirs anyway as profit share if rented). So Noone gets anything free or unequally even if their is a void etc.

All theory on my part and would end up in a nasty court case if not handled well (the original arrangment while perhaps totally innocent, solicitor error or whatever does not really bear that out though).