Shared Ownership - How to calculate percentages

boshdmg

How do (can?) you fairly calculate the ownership percentages of a property between 3 people, when they are all contributing different levels of deposit and monthly payment?

sonastin

Keep track of all payments on a spreadsheet. Each time someone pays towards the house, update the spreadsheet. Update the %ages in relation to the amount you've each contributed. Complicated but fair.

Have you talked about how you're going to handle it if one of you wants to sell? Especially if the property is in negative equity at the time?

hcb42

on what basis are the deeds...

poppysarah

What formula is written down to divide the asset/debt in case of failiure of this scheme.

taxsaver

boshdmg wrote: »

How do (can?) you fairly calculate the ownership percentages of a property between 3 people, when they are all contributing different levels of deposit and monthly payment?

It is unclear whether this is a BTL situation or a home being bought collectively for the three parties to live in.

I am going to assume the latter and work on the basis that all household bills, save the mortgage, will therefore be met equally by all three parties.

Regarding the unequal split of capital injected and mortgage payments I would suggest that you treat the mortgage as capital injected. So if for example the mortgage (say £100k) is paid monthly A-50%, B-30% and C-20% that means that A has £50k invested in the house, B has £30k and C has £20k. If the house cost £200k with balance being put in by, say A £20k, B £50k and C £30k then A has £70k (£50k + £20k), B has £80k (£30k + £50k) and C has £50k (£20k + £30k).

Therefore, as a percentage of the house A 'owns' 35% (£70k), B 'owns' 40% (£80k) and C 'owns' 25% (£50k). This may not be perfect, but I cannot think of any method which would be fairer.