Buying flat with brother, girlfriend to move in, what "rent" does she pay?

nev87

Hi all,

In rather urgent need of some advice.

My brother (26) and I (24) are in the fortunate position where we are able to buy a house together. We have exchanged are completing in early December.
We are borrowing the deposit money from my grandmother (paying her interest at savings account rates)
We are borrowing the rest in the form of a mortgage, with a term of 35 years.
We get on very well and are about to write down the "rules" before we move in. We've had a preliminary discussion and are mostly agreed apart from the issue of a girlfriend moving in. We are discussing this more formally this weekend and I would like to get some impartial input from strangers.

He plans to move his girlfriend in about 6 months. I get on with her very well and am happy with her living there eventually. The disagreement however is how thing will work financially when she moves in.
Before she does it will be my brother and I splitting things exactly in half. When she does move in he has suggested that:

* She pays a third of all bills, council tax, and service charge on the building. I am agreed on this. This will save me about £40 a month.
* I continue paying my half of mortgage, half of interest on loan from grandmother.
* She and he divide his half of the mortgage between them, so they pay 1/4 each (although she would officially be paying "rent" as agreed by a document with solicitors so that if they break up she has no claim of ownership of the property).

With the above situation the only financial difference when she moves in is that I save about £40 a month on bills. I was of the opinion that her "rent" should be a share of the overall amount of the mortgage interest payments each month, thus shrinking my monthly portion, not just shrinking my brother's portion each month. I had always felt it was reasonable (this is until I found out yesterday that my brother disagrees) that she would contribute a form of "rent" to the overall loan payments each month, meaning that I get some kind of saving for the sake of having a third person in the flat. I reiterate that I am fond of my brother's girlfriend and am happy to live with her, but the plan in my head was to live my brother alone and then for her to move in, at which point I would face some financial alleviation for having a third person to share communal space with. Both of them will have very small monthly outgoings in this situation, whilst I (also being paid less them, not that it is really a valid part of the situation) will continue to be stretched (not uncomfortably) to cover my payments and living costs.

So my question is, am I being unreasonable in my stand point above? Would it be unreasonable to expect some financial alleviation other than just £40 a month from sharing tax and bills - if so, how do I go about deciding this figure and presenting the case?

A side note, I don't have a girlfriend at the moment but at some point in coming years I may want to move one in, at which point splitting everything 4 ways is logical and I imagine seen as reasonable to all sides. This probably effects the argument. Getting advice from people emotionally and financially abstracted from this is what's needed!

Advice is much appreciated and I will be amicable in my discussions with my brother. The last thing I would want to do is fall out before we move in together. At the same time I do not want to feel disgruntled whilst living there and now is the best time to get this sorted (and in writing!). So advice on either side of the argument is appreciated.

Many thanks
Nev

Mojisola

When it comes to her paying "rent", make sure she is classed as a lodger and not a tenant or she will have legal rights to stay and you and your brother will be landlords and will have to comply with the relevant laws.

My first thoughts are that I would want everything split three ways but could you come to a compromise as, I presume, they are sharing a bedroom?

newcook

Splitting it 3 ways is the more sensible option – there will be 3 adults living in the house.

However, I would be rather wary of buying a house with someone with them wanting to move their partner in after a few months – although you may all get on now when she has moved in you may start to feel pushed out of your own home.

**Juice**

I think it would be more fair if it was split 3 ways but if they're sharing a bedroom and she's offering to pay half the bills then this was is also pretty decent - or even if her amount of rent was split between you and your brother as it would be with any other tenant...this might be a bit complicated though?

onlyroz

To be honest, I think your brother is right here. You own half the house and so should pay half the mortgage. He owns the other half and so is responsible for that half, and it is up to him what proportion of his half his girlfriend should pay.

The rest of the bills should be shared equally between all adults living in the house.

You need to get this all laid out now, though - because what would happen if one of you married and had children? Or what if one of you wanted to sell up? A bit of planning now, and getting the situation down in writing (if necessary witnessed by a solicitor) will make things easier to handle in years to come if the situation changes.

Mojisola

onlyroz wrote: »

To be honest, I think your brother is right here. You own half the house and so should pay half the mortgage. He owns the other half and so is responsible for that half, and it is up to him what proportion of his half his girlfriend should pay.

But the GF will be using the whole house, not just the brother's half.

nev87

(To keep this issue (the one we are in disagreement about) seperate from the others, I've made another post about other factors here as we're agreed on those, we're just trying to thrash them out: see "Buying flat with brother, agreeing "rules", what happens when one of wants to leave?" in "House Buying, Renting & Selling").

So, yes they are sharing a room but she is naturally using the communal areas. (As a frame of reference, it's a London flat, there's not acres of space!)
I am aware she must be recorded as a tenant and paying rent so that she has no claim of ownership
I don't expect her to pay a third of the whole monthly mortgage payment (roughly £1600) as a proportion of that (£1,180.37 to start) is interest, the rest (£389) is capital repayment (i.e. actually paying money to own the house, not just to borrow the money).
So, I was of the opinion that she should contribute a monthly share (in the form of "rent") to the £1,180. Thus alleviating my and my brothers outgoing. Is that unreasonable for me to think? If not, what would be a reasonable contribution on her part?
(Whatever the situation (although I don't know if this is a valid part of the discussion) she is going to be paying far less a month in "rent" than what she would be paying now (about £600)).

Thanks for the input so far

peachyprice

As far as I can see, the only fair way of this working is for you and your brother to continue paying your halves as you will be for the first 6 months, when his GF moves in she pays the going rate for a house share in the area which is split equally between you and your brother .

In this scenario you are both still paying equal amounts towards the mortgage/loans, your bother is benefitting financially by having his GF in residence, you are benefitting financially for having to share your living space with another adult.

IMO, trying to base her contribution on the mortgage is over-complicating things.

adamantine

onlyroz wrote: »

You need to get this all laid out now, though - because what would happen if one of you married and had children? Or what if one of you wanted to sell up? A bit of planning now, and getting the situation down in writing (if necessary witnessed by a solicitor) will make things easier to handle in years to come if the situation changes.

i agree with this. you 2 own the house. unless she is going to have a claim over the property i wouldnt split the mortgage 3 ways. you pay your half, he pays his half, she pays rent to you both (in a specific joint bank account set up for the household bills) and the bills are split 3 ways again paid into this bank account.

BugglyB

I would do it based on rooms. If she has her own room she pays a third of the mortgage. If she shares a room with your brother, she pays half of his half.

However regardless of the mortgage she should be paying a third of all bills.

nev87

Thanks for all the input here.
Another thing to add, my brother and I are spending the best part of £3000 on communal furniture & TV. We are splitting this 50 / 50. I don't expect her to chip in for this as she's not moving in for 6 months. However, if all I am getting is £40 savings on bills, I feel now that I am not going to be 100% happy about it all. It all feels a little uneven. I feel some monthly contribution beyond that is needed.