Joint ownership - Tenants in common - fair % split !?

Maximus15

Looking for Some advice regarding the % of property my partner and I will own if we ever split.

We are unmarried and I have contributed all of the deposit due to early inheritance.

Property has been purchased for £156,000

I will be paying the full 20% deposit - £31,200

I will also be spending another £35,000 on major refurbishments/extension.

How would we work out the split ?!

We will be sharing the mortgage payments 50/50

Any advice greatly appreciated.

I’ve thought about this too long and my head hurts ! Ha

GoingOn30

You need to see a solicitor and have a deed of trust drawn up that will specify how the asset would be divided if you were to part ways, somebody died, became unable to pay their half of the mortgage etc.
You will need professional help to do this properly.

G_M

As Goingon says, a solicitor to draw up a Deed.

But there seem 2 options:

1) On any sale, you take out the first £66,200 of any equity in the property, and any further equity is split 50/50.

2) Since 66,200 is (about) 42% of £156,000, you start by owning 42%. The remaining 58% is split equally, meaning you own 29+42 = 71% and partner owns the remaining 29%.


You both also need to draw up wills. What do you (each) want to happen to your share if you die? If you want it to pass to your partner, a will is required, otherwise it would go to your next of kin.


The alternative approach, of course, is to accept that buying property jointly is a commitment. Perhaps a bigger commitment (to each other) than marriage. So forget who put in what, and own it equally (perhaps as 'Joint tenants') since you are clearly commited to each other and the relationship. (if you are not that commited, don't buy the property together!)

saajan_12

Maximus15 wrote: »

Property has been purchased for £156,000

I will be paying the full 20% deposit - £31,200

I will also be spending another £35,000 on major refurbishments/extension.

How would we work out the split ?!

We will be sharing the mortgage payments 50/50

Any advice greatly appreciated.

I!!!8217;ve thought about this too long and my head hurts ! Ha

So total initial cost = 156k + 35k = £191k
Mortgage = 156k - 31.2k = 124.8k which you borrow and pay off 50/50

Partner's share = 124.8k/2 half mortgage = 62.4k = 32.7%
Your share = 31.2k deposit + 35k works + 62.4k (half mortgage) = £128.6k = 67.3%

So split is £62.4k vs £128.6k or 32.7% vs 67.3% of the inital 191k outlay.

This way, your larger investment gets a proportionally larger share of any gain in value.

Tom99

[FONT=Verdana, sans-serif]Your deed of trust needs a two part formula, you cannot just refer to a simple %age split such as 67.3%/32.7%.[/FONT]

[FONT=Verdana, sans-serif]You are buying a 34.7% share upfront (31.2+35)/191=34.7%[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]Therefore the deed of trust needs to say that on a sale of the property:[/FONT]

• [FONT=Verdana, sans-serif]You get 34.7% of the gross sale price less costs of sale[/FONT]
• [FONT=Verdana, sans-serif]You/partner split what's left after paying off the mortgage 50/50[/FONT]

[FONT=Verdana, sans-serif]That way the amount of equity your partner gets (ie what's left over after paying off the mortgage) will rise from 0% on day 2, when no mortgage has been paid off, to 32.7% when the mortgage has all been paid off.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]The above formula is dynamic and moves over time to account for both price increase and the mortgage gradually being paid back which a simple 67.3/32.7 would not.[/FONT]

pink_pirlie

Tom99 wrote: »

[FONT=Verdana, sans-serif]Your deed of trust needs a two part formula, you cannot just refer to a simple %age split such as 67.3%/32.7%.[/FONT]

[FONT=Verdana, sans-serif]You are buying a 34.7% share upfront (31.2+35)/191=34.7%[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]Therefore the deed of trust needs to say that on a sale of the property:[/FONT]

• [FONT=Verdana, sans-serif]You get 34.7% of the gross sale price less costs of sale[/FONT]
• [FONT=Verdana, sans-serif]You/partner split what's left after paying off the mortgage 50/50[/FONT]

[FONT=Verdana, sans-serif]That way the amount of equity your partner gets (ie what's left over after paying off the mortgage) will rise from 0% on day 2, when no mortgage has been paid off, to 32.7% when the mortgage has all been paid off.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]The above formula is dynamic and moves over time to account for both price increase and the mortgage gradually being paid back which a simple 67.3/32.7 would not.[/FONT]

This is what my partner and I did. Although we didn’t factor in the refurbishment costs into the equation only the initial deposit. So I get 95% of 30%, he gets 5% of 30%. Remaining less mortgage is split 50:50.
I wouldn’t have minded not having one at all. But he insisted. He is very risk averse and overthinks everything so I didn’t object as I know he would worry about it (even though I was the one who would potentially lose out).

diggingdude

If you are that worried, this probably isn't the partner to be buying a house with

getmore4less

if you split the ownership other than 50:50 then any further refurb or maintenance should also be paid at that split and not 50:50.