House Advice Following Separation

NewHomeOwner_2

Hi


Two years ago my partner and I bought a house together for £235,000. We separated 6 months later and he moved out. Since then I have been paying the mortgage and all the bills in the property myself (for the last 18 months).


I put £22,500 into the deposit and he put £2,500 into the deposit.


At the point he moved out we had the house valued and it had gone up £5000. And we’d paid £2350 off the balance of the mortgage.


Now our two year fix has ended and there are no longer any penalties we are selling the property.


The property is now valued at £255,000 and there is about £204,000 left of the original mortgage.



How do we fairly split the equity in the property?


I kept all of the furniture which had previously been bought by me from inheritance money a few years previously but we’d jointly contributed to maybe £1500 worth of furniture which I’ve kept all of.


The split is all very friendly so both of us just want to work out what’s fair.



How should we do it?

Lemonsqueezer78

When you purchased the property, were you and your partner listed in a Joint Tenancy or as Tenants in Common. Only as Tenants in Common would you and your partner have agreed a proprtional split of the property ownership.

So as Tenants in Common - where your ownership of the property is divided in to agreed proportions (70/30, 80/20 etc) at the outset, you have the legal right to divide the proceeds up according to those agreed proportions.

If you are simply listed as Joint Tenants and no other formal agreement exists, then I believe your partner has a right to a straight 50% of the proceeds.

Perhaps it's possible to challenge that in court (someone else on the board can probably confirm that with more expertise than me) but that itself would likely be very expensive to do. However you may be able to prove that your initial contributions were significantly disproportionate AND that you have been paying for the property solely for the last 18 months and a judge may agree to a different proportion...

Lemonsqueezer78

Edit: sorry - just spotted the piece about your split being very amicable.

If that's the case, it's really down to you to work this out.

You can work out what you each contributed as a proportion of the original deposit/purchase costs, and then use those proportions to work out what each person is now due from the final total proceeds of the sale (minus selling costs) - with an agreed deduction for half of the mortgage repayments you have been making over the last 18 months, if that's what you agree.

NewHomeOwner_2

Hi

No we just bought as joint tenants. We're still on friendly terms so he doesnt want 50% or anything like that!

We both just want to know a good way to work out what we should both get or what others have done?

Thanks

ThePants999

Sounds to me like the right amount to give him is his deposit back, plus 50% of the £5K increase in value before you separated, plus 50% of the £2350 capital repayments made before you separated. In other words, what he put in, plus half of the equity growth. For simplicity, I'd then go for something like "you keep all the furniture without reimbursing him, but in exchange you handle the costs of selling". That said, if you use a high street agent, the agency fees would dwarf the joint furniture, so maybe pay those jointly and you just pay the conveyancing fees.

AnotherJoe

At split, house had gone up £5,000, you both paid mortgage equally after that, you put in 90% initially so get 90% of that, £4,500, he gets £500.

House has now gone up another £15,000 (£240 -> £255)

Though you’ve been paying all the mortgage since then so some may say you should get all the increase, he's been paying rent, and it could have been the other way round, so I'd say he should get the same 10% on the next portion, so that would be £1,500.

So he gets £2,000 and you get the rest.

quidsy

255,000 sale price
-205,000 pay off balance of mortgage
Leaves = 50,000


-22500 your deposit - due back to you
-2500 his deposit - due back to him
Leaves = 25,000


I would then go for a 75/25 split in your favour as you have presumably be paying mortgage in the last 2 years alone.


so
18,750 to you
6,250 to him

split costs of sale.

Furniture is irrelevant as it was only 1,500 2 years ago so hardly high end stuff that will increase in value

Lemonsqueezer78

I would say, OP put in 90% of the deposit. Ex put in 10%.

So there is now 41,000 Equity - minus selling costs of say £3000 = £38k proceeds.

So that would give OP 90% = £34,200 and Ex 10% = £3800.

Less a deduction for the last 50% (or whatever you agree) for the last 18 months mortgage payments. So the ex should get bub-kiss probably, lol

quidsy

As pointed out though he has (probably) been paying his own living costs elsewhere & the profit from the last 2 years should be distributed evenly.


The op states they didn't sell as there were penalties so he is due a share of market growth profit imo

NewHomeOwner_2

So would it be fair if he got his deposit back (£2500) got 50% of the £2350 equity paid off through mortgage payments whilst he was still contributing (£1175), 10% (proportionate to his share of deposit) of the £25,000 increase (£2500) and 50% of the furniture we bought jointly (£750).

So total £6925.

And then we split selling costs jointly? Or should I be paying more of the selling costs?

AnotherJoe

I think it would be more than fair.