Bought with a friend. Could be in a mess. Need advice...

ShortStacked

I recently (Feb 2015) bought a house as a co-owner with one of my oldest friends (we've known each other for 25 years). We each went 50/50 on the deposit and all costs, and we got a 2-year fixed mortgage deal, which ends in February 2017. We are Tenants in Common, but unfortunately we didn't get round to completing a Deed of Trust (more on his part than mine, as he was being lazy/hesitant about it).

A few weeks ago he told me he now wants to move out so he can live with his girlfriend, as they'd like to start a family in the next few years and would like to live together first. He ideally wants to keep his share of this house as an investment. One option he's suggested is to get a lodger to cover his half of the mortgage. Clearly that would put me in the rather poor situation of having to live with someone I didn't know, who may not really care much about the house (and therefore may not respect it) and there are many potential downsides for me.

What do I do? Do I tell him I simply won't agree to moving out (thus creating animosity and an unpleasant living environment, and in which case he may simply move out anyway) or do I agree to him moving out, knowing this is likely to have a significant negative effect on my for around 18 months of day-to-day life?

What other options to I have, and where do I stand legally?

Obviously I already know I helped create this problem by not 100% insisting on a Deed of Trust.

Any advice would be very much welcome

74jax

Are you able to pick the tenant, do you know anyone looking for somewhere at all.

irishjohn

That's a rather quick change of mind on his part. Without that signed agreement you are both in a difficult situation. If you are keen to keep the friendship going then it will need careful and considerate negotiation on both sides. Here are some ideas.

• What will be the penalty if you were both to sell the house and pay off the mortgage?
• Is he prepared to cover any mortgage redemption penalty if you do agree to sell?
• Could his girlfriend live with him in this house until such times as the mortgage period finishes?
• Could he move in with the Girlfriend and simply contribute to her monthly bills but live rent free until the mortgage period comes to an end?
• In February 2017 will you be in a position to buy him out and become the sole owner of this property?
• If he expects you to take in a lodger is he prepared to give you a proportion of the rent as a compensation for making you live with a stranger?
• Could you and the girlfriend swop homes for the remainder of the mortgage arrangement to allow you to live without a lodger and allow them to live together as a couple?

This will show that you are willing to look at every option available and hopefully he will realise he has placed you in a difficult position and he needs to ensure he is willing to compromise or compensate you.

peachyprice

ShortStacked wrote: »

Clearly that would put me in the rather poor situation of having to live with someone I didn't know, who may not really care much about the house (and therefore may not respect it)

Or you may find yourself a really great lodger who you have loads in common with, who respects you and your house, without the baggage of a 25 year friendship, and life could be good.

duchy

Why don't YOU find the lodger that way you can choose someone suitable- and remember a lodger isn't like tenancy-if there are problems it is very easy to get rid.

Did you never discuss this possibility -of one or other of you wanting to live with a partner ? As fifty fifty owners it coud be worse and your friend could insist on moving him girlfriend in- and there would be little you could do to stop it - so a lodger really is the best option to avoid redemption fees .

In some ways a lodger can be a better option as the dynamic is different - I've had lodgers who were better to share with than friends as we got on but weren't in each other's pockets. Try and find one who works different hours to you - eg shift worker (nurses are often good) or someone looking for a Monday to Friday let for example. Other good options are someone who travels a lot for work -(I'd personally avoid students, even mature students as they tend to be at home more to study-you want someone who works fulltime hours.) That way you both have time and space to yourselves.

Frankly this should all have been sorted out before you bought but life happens and you can acknowledge you've learnt lessons from not covering all possibilities legally and decide you are happy for your good friend that their relationship is going so well or you can be difficult and resentful and end up with a broken friendship which will make selling up later on potentially more difficult with bad feeling on both sides.

There is a world of difference between a share where the balance of power is different An owner , lodger relationship as even if you are friends or friendly - it's an (often unspoken) acknowledgement that when it comes down to it -it is your home your rules.

If your friend told you about this some weeks ago it's probably better to sort things out before it sours the friendship.

ShortStacked

74jax wrote: »

Are you able to pick the tenant, do you know anyone looking for somewhere at all.

Hi, arguably I would be able to pick the tenant. However I don't know anyone looking to move in.

bathwiggle

My partner was in this situation, although they managed a month before it all went wrong.

The friend started dictating what could be done and when, and no changes to the house were allowed without his permission (oh wanted to paint his room!). There was a conversation where OH said in 2 years time he would probably move in with me. OH and i went away for 2 weeks and the friend moved out and said he'd pay half the mortgage but no more for anything. My OH couldn't afford to run the house by himself.

so oh got 2 lodgers to cover everything, including bills, friend wanted all income from them that was left over not to be kept for repairs, but paid straight to him. As it was they covered the bills and that was it, so OH ended up doing up the house using his own money, and having to put it on the market.

If you say he can't go, he will anyway. If you advertise for a lodger you get to pick. Or you find out what the redemption fee is, and get a valuation and see if there has been enough of an increase to get away with selling it and covering most of your losses.

OH had resistance when he stuck it on the market, but the estate agent was very good about mediating between the two and getting the friend to realise turning down a very good offer out of spite was ridiculous.

I've got a lodger who has moved house with me,and is a star, i didn't know him before i rented a room at my last house, but wouldn't dream of getting rid of him now.

duchy

ShortStacked wrote: »

Hi, arguably I would be able to pick the tenant. However I don't know anyone looking to move in.

The best lodgers tend to be people you don't know -as already stated.

Maybe you need to be a bit more proactive -let everyone know you are looking for a lodger-or even advertise. You can insist you get to choose rather than go for the first person who applies.

ShortStacked

Thanks for all your help and advice so far. Some really useful viewpoints.

It seems several people feel a lodger situation could work out ok.

I'm not sure that I want to sell the property, as it's been difficult for me to get on the ladder and this place looks to be a good investment with the growth in east London recently.

If going for a lodger option, my gut feeling is that this should be done with contracts/legal agreements in place. What are people's thoughts on this? Has anyone gone down the more informal arrangement route?

duchy

duchy wrote: »

The best lodgers tend to be people you don't know -as already stated.

Maybe you need to be a bit more proactive -let everyone know you are looking for a lodger-or even advertise. You can insist you get to choose rather than go for the first person who applies.

Think about the sort of lodger you'd like - if their sex matters, age, if it would be important to you, if they were a professional etc (personally I wouldn't want a very high maintainance female who looks like she spends hours on her appearance so is likely to hog the bathroom for example ) but a nurse in her thirties with common sense, who worked in the NHS (so tended to pick up bank shifts on her days off sometimes) and was a nice by fairly private person was the best lodger I ever had and ended up becoming a good friend even after she moved on.


You really don't need complicated legal agreements with lodgers- and if you have them you can end up giving them more rights .
Essentially with a lodger you can end the arrangement at any time -and don't need to give a reason. I've needed to end arrangements twice (when it was needed rather than a lodger moving on naturally) and in both cases as they paid monthly I gave them a month's notice.


Best to ask about the legalities on the housing board - but basically you'd be paying to set up a lot of legalities that you don't need .


Just realized you are in East London - you will have a good choice of applicants in that area and the odds of finding a Monday to Friday only rental are good with people who work in London but have homes or relationships in other parts of the country.


You don't need to decide if you want to sell at this point -although obviously your co-owner might want to realize their investment after two years anyway - although by then your circumstances may have changed - or they may be happy to keep their investment as is if your lodger works out well. Who knows ? For now focus on the current situation and worry about what happens when the fixed rate expires -when it does. One problem at a time

silvercar

What do I do? Do I tell him I simply won't agree to moving out (thus creating animosity and an unpleasant living environment, and in which case he may simply move out anyway)

Kidnap is a criminal offence. If he wants to move out there is nothing you can do to stop him.

His financial obligations are clear. He has an obligation to pay his share of the mortgage (technically you both have a joint obligation to pay it all, but lets assume he is a decent person).

Whether he has any obligation to pay towards the utilities for a property he won't be living in is debatable. I would assume he, as a joint property owner, would have an obligation to repairs.

So your options seem to be to allow a lodger to live in the property to help your co-owner out with his mortgage obligation and to have someone for you to share the bills with, or to insist on living in the property on your own and shoulder all the utilities.

Whichever way you go, this situation could prove to be temporary. If he wants to buy with the girlfriend in the next few years, there is a high chance he will want his name off the mortgage and his share of the equity back.

Another option is for you to move out and rent your half of the property to the girlfriend.