Stuck in ownership

ttsmh

Any advice on this would be hugely appreciated.

I own a property with an old friend. basic details:

Bought in October 2011Buy price £500,000Equal deposits at time of purchase
Original loan amount: £ 389,999.00
Current outstanding amount: £ 359,587.81
Current Value: 900k-1m (we renovated and extended)

My friend moved to Australia a year ago - at that point I took over mortgage payments. This is not such a bad deal for me as I get the whole place for a manageable monthly amount.

Sadly, we have had our differences and since he moved he has either wanted to sell (instructing estate agents without my knowledge), and now is refusing to sell and demanding that I accomodate a new tenant of his choosing in one of the rooms so he can earn over his mortgage payments - which is practically not going to be possible.

Ultimately I don't want to be faced with these shifting demands and threats, want to push for a sale and a fair resolution as soon as possible.

Can anyone advise how this case would be viewed in court, should it come to that?

Huge thanks in advance for any advice. :beer:

TBagpuss

A court is likely to say that the property should be sold, and if either one of you wants to keep the property you can do so buy buying out the other.

If you had an agreement at the time that your friend moved out that you would pay the full mortgage payments in return for living in the house then the split on sale is likely to be 50/50 however for the period from the point at wheich he wanted to sell and you prevented it, he may argue that he should be entitled to some adjustment - perhaps 50% of a market rent less 50% of the mortgage payments.

I suggest that you contact him, propose that the property is marketed immediately on the basis that the proceeds of sale will be split equally and that you will meet the mortgage payments until sale. Get 3 agents to look at the property and send him the details, ask him to pick one or to let you know which other agents he wants to instruct.

If he comes back saying he wants to rent the property out then you can tell him that you are happy for him to buy you out if he can get a suitable mortgage.

Im a bit confused about you saying he wants to 'earn over his mortgage payments' - is he currently paying anything towards the mortgage?

ttsmh

Hi TBagpuss,

Firstly, thank you for your advice.

Currently he is not paying anything towards the mortgage. He beleives (rightly I would agree) that he could earn more than his half of the mortgage payments which I am currently paying, hence wants more money. I am understanding of this, but do not want to be responsible for managing or living with tenants when it's not my choice. I'd like to be in control of my own situation, without a joint owner making demands from Australia.

We indeed had an agreement at the time that he moved out that I would pay the full mortgage payments in return for living in the house. I refused to sell for around 1 month, before deciding it would be for the best and agreeing to look int ito in Spring - now basically.

I have been on the phone to him attempting to convince him this is the best option but his line is now 'I'm not selling'.

Thank you again.

ttsmh

Does anyone have experience in obtaining a court order for a sale?

Costs, timeframe, who pays, common challenges? Thanks!

SerialRenter

Seems to me, you paying his half of the mortgage is in effect you "renting" his half of the house so you're a sole occupier.

In other words, tell him that if he wishes for a lodger to be in the property, he'll be liable for his half of the mortgage again (plus your management fee's).
And that you would also be taking half of the profit from the lodger too.

Be adamant that these are the conditions of getting a lodger.

The way i've read your post, it seems like that would work out to be less money gained from the lodger than his mortgage repayments cost, then it would be pointless for him to do so as it would work out to be a monthly cost, rather than £0 for him, so selling would be the best option.

JimmyTheWig

I would have thought that the best thing all round would be to sell. Nice bit of equity for each of you.

I can see why he would rather put a tenant in there than let you have the whole place for the cost of the mortgage.
You could view the place as being split into 4 parts.
Your share of equity: £300k
Your share of mortgage: £180k
His share of equity: £300k
His share of mortgage: £180k
(using rough figures)

You are paying his share of the mortgage, which is fair enough, but his share of the equity is doing nothing for him.
Not surprisingly if he can rent out his half of the house he will more than cover his share of the mortgage as he will be getting a return on his share of the equity too.

But what I would be surprised at is if this is better for him than selling. Yes it would more than cover his mortgage, but he needs to factor in the return on the £300k equity that he would be getting if you sell up. Would the rent cover this, too?


If it would, then I would consider a third option. You move into rented accomodation and let out the house as a whole. Letting out the house as a whole must bring in more than twice letting out half of it (I mean, who really wants to live with a stranger?). So if his suggestion is a good deal for him then letting out the whole thing must be an even better deal for the pair of you.

Pixie5740

How exactly does your friend plan on finding a lodger whilst he's on the other side of the world? Not to mention arranging the gas safety certificate and collecting the rent. Would they even be a lodger if the LL lives elsewhere but one of the other property owners still lives in the property? Would that make you both landlords meaning the half of the rent could be classed as taxable income for you?

Easier all round if you sell the property and move on with your lives. Whilst you could move out and then let the whole property out, you'd be the one dealing with the tenant, not someone who lives in Australia.

ttsmh

Thank you both very much for your advice.

Renter - The angle my friend would take on this is that since he is renting 'his' half of the property - he would be then be entitled to 100% of the proceeds from the tenant. Does that stack up?

Jimmy - Approaching the matter as an investment is probably the best hope I have of persuading my friend to revert to his initial preference of selling and most importantly avoiding court. I have considered renting the whole place, however I'm then liable to tax on earnings fom the property before I rent somewhere else to live, and I'm still in the situation where I own the property with this person - where it's my preference for this not to be the case.

Thanks again, I'm seeing a lot more sense in the situation.

SerialRenter

ttsmh wrote: »

Thank you both very much for your advice.

Renter - The angle my friend would take on this is that since he is renting 'his' half of the property - he would be then be entitled to 100% of the proceeds from the tenant. Does that stack up?

I don't think so, no. Because he is in effect already renting his half to you, You are paying him by covering his half of the mortgage. If he wishes for someone else to use his half, then i see no reason why you would continue to cover his mortgage.

Likewise, if the property is turning a profit, as you're both the owner, you should both be entitled to the profits it generates. You would be managing the lodger, the utilities, having to live with them and generally getting the short end of the stick. What's in it for you?

Randomjargon

Don't worry, if people come round just scream loudly at random intervals. Explain to them your love of 90's dubset and your extreme views on immigration.

Only worry would be if someone said yes then....

ttsmh

SerialRenter wrote: »

Likewise, if the property is turning a profit, as you're both the owner, you should both be entitled to the profits it generates. You would be managing the lodger, the utilities, having to live with them and generally getting the short end of the stick. What's in it for you?

Referring to a shared profit it generates - when you say 'profit', do you mean all of the proceeds from the tenant, or the amount over and above his half of the mortgage?

You're right - not a lot in it for me! Thanks again.