Deed of Trust wording

quickoldfart

My partner who currently lives with me (rent free) wishes to invest in my house rather than pay rent.

My property agreed value is £375k, I currently have £227k equity (approximately 60%) a £148k mortgage (approximately 40%)

We are planning on splitting the existing mortgage 50/50
and are planning to have a deed of trust drawn up, to protect our interests (we have both been married before) but we disagrees on how to divide up future assets.

My proposal: I always retain my 60% share, plus half of whatever the remaining 40% does.

Her Proposal: I always keep £227k and we split everything else 50/50

Now to me, the problem with her proposal is that as the house increases value my 60% share diminishes drastically whilst the remainder (which she gets half) increases drastically, which does not seem fair.

So I would value any opinions what is fair for both of us?

Thanks in advance

Pete

Pixie5740

Personally, I'd go with your way. Otherwise it's kind of like you're giving her an interest free loan in order to buy into the place. Also, what if property prices don't rise? Doing it her way you would always get £227k back. What happens if house prices fall and after the mortgage is repaid and you get your £227k back there's diddly squat left for her, or worse still there's no enough left over to give you £227k so she's left owing you money?

I'm not entirely sure how your deed of trust will work though since I'm assuming you're the only one named on the mortgage and therefore the deeds as well. Would you get a joint mortgage so that you are both jointly and severally liable for the whole rent? That would also get her on the deeds.

If you search the board for Deed of Trust then you'll see it's been debated many times on the forum before. That will give you some insight as to what other people think is fair/reasonable.

quickoldfart

Many Thanks Pixie5470
I thought my version seems fairest, but she cant see it.

Guest101

Why does she not invest elsewhere? Keeps it all neat and tidy

quickoldfart

Guest101 wrote: »

Why does she not invest elsewhere? Keeps it all neat and tidy

Because that was not the question asked !

Basically her options are pay me rent or pay towards the mortgage, we have chosen the Latter! what I have asked advice on is how to word the declaration.

Pixie5740

Well if she pays you rent which is over and above half the household bills excluding the mortgage then she will be contributing towards the capital repayments of the mortgage and will start building up a beneficial interest in the property regardless of any deed of trust.

quickoldfart

Pixie5740 wrote: »

Well if she pays you rent which is over and above half the household bills excluding the mortgage then she will be contributing towards the capital repayments of the mortgage and will start building up a beneficial interest in the property regardless of any deed of trust.

Blimey that doesn't sound very fair, would the same apply to anyone renting a room in a house?

Pixie5740

quickoldfart wrote: »

Blimey that doesn't sound very fair, would the same apply to anyone renting a room in a house?

That's comparing apples with oranges.

You are a couple living together as one household. An excluded occupier (lodger) is not living as one household with their landlord and has their own room. Lodgers don't share a bed with their landlords.

it could be said that it's not fair for one half of the couple to help pay off the other person's mortgage but get diddly squat if the relationship breaks down.

https://www.citizensadvice.org.uk/relationships/relationship-problems/relationship-breakdown-and-housing/if-you-live-with-your-partner-relationship-breakdown-and-housing/if-you-live-with-your-partner-and-you-own-your-home-relationship-breakdown-and-housing/relationship-breakdown-and-housing-beneficial-interest-if-your-partner-owns-the-home/

quickoldfart

Pixie5740 wrote: »

I'm not entirely sure how your deed of trust will work though since I'm assuming you're the only one named on the mortgage and therefore the deeds as well. Would you get a joint mortgage so that you are both jointly and severally liable for the whole rent? That would also get her on the deeds.

Just re read this bit.
We looked at a joint mortgage, but as she owns another property, she would get clobbered for stamp duty on this, and then really clobbered if she sold her flat and bought another.

So the mortgage and deeds will be solely in my name, the deed or declaration would just cover our investments should things go pear shaped.

Pixie5740

I think there's a possibility of being clobbered with the additional 3% SDLT anyway because she would be a beneficial owner of the property but I'm not sure. It's not my area of expertise (not that I'm sure I have expertise in any anything.)

quickoldfart

Pixie5740 wrote: »

That's comparing apples with oranges.

You are a couple living together as one household. An excluded occupier (lodger) is not living as one household with their landlord and has their own room. Lodgers don't share a bed with their landlords.

it could be said that it's not fair for one half of the couple to help pay off the other person's mortgage but get diddly squat if the relationship breaks down.

https://www.citizensadvice.org.uk/relationships/relationship-problems/relationship-breakdown-and-housing/if-you-live-with-your-partner-relationship-breakdown-and-housing/if-you-live-with-your-partner-and-you-own-your-home-relationship-breakdown-and-housing/relationship-breakdown-and-housing-beneficial-interest-if-your-partner-owns-the-home/

Interesting reading , thankyou for that.