Tricky Situation - help and advice appreciated!

matthewbarber1984

I am hoping someone may be able to help and advise me on my current situation.

My ex girlfriend and I bought a flat in Ipswich in December 2007 for £128k. Within 6 months, and due to the financial crisis, the flat fell into negative equity and remains that way still. In December 2010 we split up, and have rented the flat out since, without either of us needing to put any money towards the costs of the flat.

I have moved on, and am now married with a child (age 2). I am aware that my ex girlfriend is now married and has 2 children. She has essentially been 'managing' the property since it has been rented as she lives in Ipswich and I now live elsewhere. There is still £122k left on the mortgage, and it is interest only. The current market values suggest that if it was sold it would only fetch around £105-£110k. I have never seen a penny of the 'profit' made on the flat each month after mortgage, maintenance and ground rent have been paid (around £150 to my understanding). We do not have any joint account together, and the mortgage payments are made out of her account.

My wife and I want to buy a house together, as we are currently renting, and want to build a future for us and our family.

I was just wondering if you can advise on me on either

1) the best way to get my name off the mortgage,
2) how can I go about getting a mortgage with my wife if I can't get my name taken off the mortgage for the Ipswich flat
3) should I just sell and speak to the lender about the shortfall?
4) any other options I may have?

Hopefully someone may be able to help.

Many Thanks

Matt Barber

Tixy

The best way to get your name off the mortgage would be for you and the other owner to sell the property and agree to fund the shortfall in the mortgage between you.

You cannot just sell on your own, you both need to agree to do this.
Is she likely to agree to do this? If your lender has only given you consent to let the property for a fixed amount of time, then perhaps this will act as an incentive to her?

In terms of not knowing what profit is being made on the rental - you need to know this and the relevant figures to declare the rental income to the tax office. Have you asked her for all these figures? If there is a cash profit each month why have you not agreed to be put this towards the mortgage debt?

RAS

As above.

Do you have consent to let (mortgage provider)?
If this is a flat, are you even allowed to let under the terms of the lease?
Has your ex complied with all the legal requirements such as securing the deposit properly, making submisisons to HMRC?

You need to know all of these.

JimmyTheWig

Tixy wrote: »

If there is a cash profit each month why have you not agreed to be put this towards the mortgage debt?

Presumably because the ex has gone to all the trouble and hard work of managing the flat and the OP hasn't. Why should all the money come off a joint debt?

Pixie5740

Does all the rental income belong to the ex though if they both jointly own the property? Should both of them not be declaring the rental income to HMRC?


How was the property purchased? As joint tenants or tenants-in-common?


It's not a simple case of just taking your name off the mortgage. Your ex would need to raise enough funds to buy you out which is going to be tricky if the property is in negative equity and a deposit of at least 25% will have to be found to get a BTL mortgage.


You could try and sell the property and make up any shortfall yourself although you'll either need your ex's consent to sell or go to court to try and force the sale.


Can you afford to service the current mortgage and a new mortgage?

xylophone

See http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

The OP and Ms X own the property but are not married and do not appear to have a business partnership.

"Taxpayers who have jointly owned property should know who is keeping the records and have access to them. They are personally responsible for including their share of the income in their own tax return even if they agree that someone else will keep the records.

Jointly owned property - no partnership

Where there is no partnership, the share of any profit or loss arising from jointly owned property will normally be the same as the share owned in the property being let. But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed."

The OP should ascertain that there is consent to let and check the tax situation.

After that, he and Ms X might be best advised to sell the flat and jointly fund the loss (possibly having taken account of the profits received by Ms X )- a clean break?