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

duchy

Do us a favour
Let us know how this works out

DandelionPatrol

ShortStacked wrote: »

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.

Those 2 together is a bit of a cheek IMO. If you had bought the house on your own and taken a lodger, you would be having all of the equity gains for yourself. He effectively wants to pay nothing, impose a lodger on you and take a profit.

If, hypothetically, you were blood yminded, you could take him and yourself down by not paying the mortgage , so he has to pay the mortgage in full himself - which would scupper his plans - and if he were equally blood yminded, he might not pay either, which will leave you both repo'd and probably unable to take a mortgage again - you have been friends for 25 years, so I am guessing you could both be too old for a mortgage by the time the dust had settled.

Now, the point of the last paragraph is not to suggest going down that road, but to make the point that you both have a common interest in making things work.

If friend leaves now, I would suggest that the right settlement is for you to buy him out in stages

• Pay off his share of the deposit and purchase expenses ASAP
• Get him released from the mortgage as soon as you are able

If you negotiate along these lines, you need to get the trust deed set up to reflect the situation. [It does now seem clear why he did not so the trust deed in the first place.]

jobbingmusician

There are a couple of other options no-one's suggested yet.

1. You move out as well, and you let the whole house. It sounds as if you don't want to do this (which I understand), but I think it's worth thinking about what WOULD make this option manageable for or attractive to you - would it make it attractive if the money worked well, and all your moving costs and hassle were covered? I just think it's worth you putting a monetary value on what you would need were you to consider this option.

2. Converting the house into two (or even more???) flats - how much would this cost, and could you (both) increase the mortgage to do this, so that you each had an increased asset?

Mojisola

Get a lodger rather than suggest he moves his GF in.

A lodger could work very well but get everything in writing between you and your friend about how it will work, who gets what money, who covers any gaps between lodgers, etc.

Rambosmum

As someone else said I'd look at getting a Monday to Friday lodger. You'll get slightly less rental per month but the home will be yours at the weekends.

We (my partner and I) have had lodgers and have only had one negative experience.

Lodgers are easy to get rid of. A quick google for a lodger agreement is all you need, which basically sets out the rooms the have access to, the rent and what it includes, any 'house rules' e.g. no smoking and how the agreement can be ended (2 weeks notice, 24 hours notice for criminal activity) etc. Lodger have few rights in law and realistically you don't want to give them more just in case. With a lodger it also perfectly legal to change the locks and put their belongings in safe storage allowing them a time to collect if they haven't vacated by the end of the notice period. Lodgers deposits also don't need to be deposit protection scheme.

One thing that strikes though is that you and your friend need to be clear as to who will cover the mortgage whilst you don't have a lodger- it may not be easy to pick one to run straight after one leaves.

gettingtheresometime

I know getting a lodger is the sensible way to go but can you without the permission of your mortgage lender?

As for letting the house I would also think you'd need the permission of the mortgage lender.

Rambosmum

gettingtheresometime wrote: »

I know getting a lodger is the sensible way to go but can you without the permission of your mortgage lender?

As for letting the house I would also think you'd need the permission of the mortgage lender.

Yeah, they don't care as long as someone named on the mortgage also lives there.

BigAunty

Landlordzone has a section with advice about how to find a lodger, draw up agreements, the government's 'rent a room' scheme which gives a tax free allowance up to approx 4.5k per annum to a landlord with a live in lodger, plus things you may not have considered, such as getting permission from your house insurer.

You should insist that he signs the Deed of Trust - make it a condition to agreeing to let him move out (though from a legal perspective, he can move out anytime he wishes, your permission is not required).

You also need to look to the future. If his relationship succeeds and he wants to buy a property with his new partner, he will inevitably want to sell otherwise he will inevitably be able to secure a new mortgage for his family house.

So when do you think you will be in a position to buy out his entire share from the lender's perspective? When will you earn enough to take it over in your sole name according to the lender's criteria?

That said, if you don't want to sell up, he may face a long and expensive battle to take you to court to force the sale.

Do you know that he can move back in whenever he wishes? Being an owner gives you the right to take up occupation. What if he falls out with his current missus and wants to come back?

ShortStacked

gettingtheresometime wrote: »

I know getting a lodger is the sensible way to go but can you without the permission of your mortgage lender?

As for letting the house I would also think you'd need the permission of the mortgage lender.

We do have to get permission from the lender, and they can charge a 1% interest increase at their discretion.

ShortStacked

I am SO pleased I posted on here. You've given me lots of useful advice and things to think about. Thanks all.

It sounds like the best thing for me to do is:
- Accept the fact that he's going to move out, and work with him to find a way which is mutually beneficial
- Explore the other possibilities first (which I have already been doing) to ensure we've discussed, and understand the implications of, each option
- Insist on him signing a Deed of Trust before he moves out, which will need to address things like equity split, what happens if he wants to move in, and all the other stuff that would normally go in
- Ensure I have full control and final say on lodgers
- Don't bother going down a full legal arrangement route, but check out Landlordzone and ensure we have a lodgers agreement
- Ensure all costs will be bared by my friend