Getting ex wife to pay her share of expenses on shared propery which is rented out

TheSilentMeow

OK. My husband rents out his former family home, his ex wife wants nothing more to do with it and two years ago went off leaving him to deal with it. It was and still is in negative equity, we tried to engage her in discussions over paying half each of the negative equity and then selling. She refused to engage so we let the property and every month have to pay an extra £101 on top of the rental income, out of our own pockets, to cover the mortgage repayments, along with £40 landlords insurance and all maintenance and repairs. We have always declared this, and until this April have obviously not had to pay any tax. However as of April we will have to pay full tax as well as making a loss.

The negative equity stands at around £10,000 - £15,000.

I have written his ex wife a letter and sent via recorded delivery, telling her that as of next month she will be getting an invoice from us for her share of the short fall, her share of the landlords insurance and her share of any maintenance and repairs. I've sent her copies of the tenancy agreement and insurance documents.

If she ignores my letters and invoices, which I suspect she will, how can we get this money from her? Are we allowed to use a small claims court for this sort of thing? We don't have very much money left over every month to pay a solicitor to act on our behalf, as they are charging £100+vat for 45mins of their time and then more to send a letter. Can I charge interest if she doesn't pay? We don't know what we are doing really, we just need her to start either paying her share or pay off her share of the negative equity and then she can come off the mortgage and deeds, but so far she just ignores us.

camptownraces

However as of April we will have to pay full tax as well as making a loss.

This bit doesn't make sense. You have all the expenses of the property (mortgage interest, repairs, insurance etc) and you collect all the rent from the tenant, is that correct? Or is ex-wife the landlord?

So how, if the letting makes a loss, do you have to pay tax on it? It doesn't work that way.

TheSilentMeow

camptownraces wrote: »

However as of April we will have to pay full tax as well as making a loss.

This bit doesn't make sense. You have all the expenses of the property (mortgage interest, repairs, insurance etc) and you collect all the rent from the tenant, is that correct? Or is ex-wife the landlord?

So how, if the letting makes a loss, do you have to pay tax on it? It doesn't work that way.

As of April 2016 tax is now applied to turnover and not profit.

She is joint owner, thus joint landlord by default.

rtho782

A complex scenario

It sounds like you need out of this property really, it's nothing but a millstone around your necks.

The mortgage company will hold your husband and his ex wife jointly and severally liable. You don't have any agreement that there is a "his half" and "her half", the reality is that, were you to default, the mortgage company could and would pursue whichever of the two they felt most likely to repay, which it sounds like would be your husband.

His Ex Wife can't necessarily be held liable for the things you are trying to hold her liable for. E.g. she may well decide she does not need Landlords insurance, does not want to repair the house and is happy to let it fall into disrepair, etc.

Your husband has let the property out so is obliged to keep it to a certain standard, she may be happy to let the mortgage company repossess it.

If you were to stop paying and hand the keys back to the mortgage, it would destroy your husband and his ex-wife's credit rating. This may be important to him, she may not care. You can't force someone to care. If she has few or no assets, your husband may be on the hook for the whole amount!

If you sold the house, and took out a personal loan to cover the ~£12,500 shortfall, you would be repaying ~£226.55 a month back for 5 years, with no risk, and no cost of repairs. As you are currently paying £141 a month, and will be paying much more with the tax changes, plus a ton of risk, this may well be the best option.

Yes, it means you get nothing from her, but you are getting nothing from her anyway!

TBagpuss

Presumably your husband and his ex wife had a financial order when they divorced. What does it say about the house?

If the order deals with the house, then your husband would probably need to apply back to court to enforce the order, rather than starting new small claims procedures.

If there was no order then he might be able to apply via the small claims process for any shortfall on the mortgage, but I don't think he is likely to be able to recover other expenses unless she agreed to the propety being rented out and to your husband managing it I also don;t think that small claims allows for an onhgoing claim, so he would be looking at claiming any back payments, not at setting up an ongoing payment.

mark5

Your husband needs to write to her not you, asking if she has any objections to allowing the bank to repossess the property as he no longer wishes to pay the shortfall each month.

Try and bluff her!

TheSilentMeow

TBagpuss wrote: »

Presumably your husband and his ex wife had a financial order when they divorced. What does it say about the house?
.

There was never a financial order agreed. I know, it's utter madness!

HouseBuyer77

TheSilentMeow wrote: »

As of April 2016 tax is now applied to turnover and not profit.

I don't think it's quite that simple. Tax relief on mortgage interest is now calculated as if you were a 20% payer regardless of what band you fall in. So if your income (including rent) falls below the 40% band there will be no change. If it's above the 40% band you will have an extra tax bill, but you still get some relief based on mortgage interest payments.

As for everything else they're altered the wear and tear allowance so you actually have to itemize things rather than claiming a standard amount.

Not sure where landlord's insurance fits into this picture.

camptownraces

TheSilentMeow wrote: »

As of April 2016 tax is now applied to turnover and not profit.

She is joint owner, thus joint landlord by default.

Not necessarily.

Does the tenancy agreement name both the husband and the ex-wife as "The Landlord"?

Does the ex-wife receive half the rent?
(Or perhaps the rent goes into a separate "lettings account"?)

gingercordial

TheSilentMeow wrote: »

There was never a financial order agreed. I know, it's utter madness!

Then my advice would be that he commences the process to get one. As you may know the financial order is separate from the divorce - the divorce ends the marriage, but does not end the financial ties and responsibilities. Not having a financial order is a huge liability for you both. What if she becomes disabled and can't work, so claims maintenance? What if you inherit something or win the lottery and she wants half? Or in the future wants to claim his pension? Unless you have a financial order everything is still up for grabs.

If she is willing to come to an agreement this can be done by drawing up a consent order, and with the house being involved you would need a solicitor to make sure the wording does what you intend. If she won't come to an agreement then he will need to ask the court to decide, and that will unfortunately cost more. Even so, it will cost less than leaving it without one has potential to cost you.

silvercar

I hope she has been declaring half of the rent as income to hmrc. Even if making a loss it should still be declared.