Equity in Shared Property After Separation

dt04

Hi,

I’m after some thoughts around my current situation. My wife and I separated last year, amicably, whilst living abroad. We returned to the UK this year and my wife was originally given accommodation through her work (not entirely suitable as it was a one-bedroom apartment and we have two children), but has now moved back into the house that we jointly own.

We originally put our property on the market but she then refused to sell, despite at least 1 very good offer, which I only found out about via the estate agent later on. I am currently living with my parents, but will be looking to move out once everything is sorted.

We currently share 50/50 day to day care of the children and my wife cannot afford to get a mortgage for our property on her own (we have always earnt the same) and therefore cannot take me off the current mortgage. Because of this, when I do move out I will need to rent and I have asked that whilst I am doing this I would still get equity in the house moving forwards. My argument is that I will be renting somewhere not as nice as our house, which my children will spend 50% of their time in, whilst she will be paying the mortgage and getting equity from it.

I feel as though the best solution would have been for us to sell the property so that we can both move on with our lives, but now the children are back in the property (they moved in this weekend after being out for over 18 months), I don’t want it to have a negative effect on them and she is also saying that she will apply for a Mesher Order.

I’ve spoken to solicitors who have advised that it is unlikely that would happen, but that it would also cost us more than the equity to go to court. She is refusing to do mediation unless I pay for it.

My main question really is around the equity. If I am renting somewhere for the same amount that she is paying monthly for the mortgage, should I therefore be entitled to continued equity in our house? I guess I'm asking from a moral point of view more than a legal point of view but would be interested to hear from both sides.

Thanks

TBagpuss

OK, there are various different ways to sort out an interest in the house where it is not going to be sold immediately , 

The most common way that this is done is that you would work out what your interest is now - e.g. if the house was sold today, how much the equity would be, and what your share of that would be.

Suppose that the house is worth £300,000 and the mortgage is £100,000 then 9ignroing costs of sale ) the equity is £200,000 and if split evening, you would be entitled to half of that, so £100,000.
So you would normally then work that out as a % of the total value of the house  - so 100,000 as a % of £300,000, and would then say you were entitled to a lump sum equal to 33.3% of the value of the house. This means that you get the benefit of any increases in house prices but not of money your excuses to reduce the capital outstanding on the mortgage.

If you wanted, you and your wife could instead agree that you got a lump sum equal to 50% of the net equity, in which case you would benefit from her paying down the mortgage, but this is unusual nowadays as it's  seen as unfair that you should benefit from her paying off the mortgage.

A court generally prefers to achieve a clean break if possible, so if it would be possible for you to both rehouse if the house were to be sold, then that's  generally the best option as it allows you both to move on, and ideally you each end up somewhere that 's also suitable for the children.

another option may be a mix - for instance, if your wife can afford to take on the mortgage but can't afford to pay you a lump sum equal to half the equity, can she borrow a lesser amount so you get a lump sum ow, and a further payment later? That might allow you to buy somewhere now and then use the second lump sum to pay down the mortgage once the children leave home, for example. 
 

dt04

Thanks for your reply, at the moment we are splitting the current equity 50/50. You make an interesting point about it being seen as unfair that I should benefit from her paying off the mortgage as this is my main question really.

Let’s say the mortgage payment is £1000 per month and I am paying £1000 to rent (notwithstanding that any property I would get in our area for the same cost would not be as nice as our house and I won't have the long term stability!), my ex is saying that as she’s paying off the mortgage I won’t be entitled to the equity whilst she is paying it. But I’m only having to rent because she is refusing to sell our house. I could understand it if I earnt more than her, or if the children spent more time with her, but we earn the same and share the childcare 50/50.

pinkshoes

As you are both equal earners and both having the kids 50/50, then this should simplify things.

You need an arrangement where you are BOTH happy, and the kids are happy. And to decide if it is fair, then either of you should be happy to take either scenario. e.g. flip a coin and whoever gets heads chooses. 

I'm thinking that if you moved into the house, paid the mortgage, and she had to rent elsewhere, then she would not be happy with the reverse of what she is suggesting? I certainly wouldn't be. I would suggest this scenario to her and see how she reacts.

On the other hand, if you sold the property, then I'm assuming neither of you can afford to buy, so although this would be fair and you would both then have to rent a property. 

It's all very well saying that she will get a Mesher order, but don't forget that you could also do that...


Rent a studio flat, then take it in turns to stay in the family home and the flat. You both pay the mortgage and the rent and when you finally sell up then everything is split 50/50.

Or take it in turns for a week each in the family home then the other week you live with family or friends?

comeandgo

What about any pensions you both have.  If you have the larger value pension your wife may be entitled to a proportion of it but instead of her taking your pension you could give her a larger portion of the house.

comeandgo

What about any pensions you both have.  If you have the larger value pension your wife may be entitled to a proportion of it but instead of her taking your pension you could give her a larger portion of the house.

dt04

Thanks for the replies, I did actually offer to buy her out of the house and take her off the mortgage, but she refused (she'd already arranged to move back in at this point, but I did ask what would happen if the scenario was flipped). Her reason for not wanting to rent is that the 'maternal home' shouldn't be rented accommodation. I'm happy to live in a rented 2 bed flat, whilst she lives in our 3 bedroom house, as long as we continue to share in the equity of the house moving forwards.

I believe her pension would be worth more than mine, but I wouldn't want it to be split to be honest.

RogerBareford

dt04 said:

Thanks for your reply, at the moment we are splitting the current equity 50/50. You make an interesting point about it being seen as unfair that I should benefit from her paying off the mortgage as this is my main question really.

Let’s say the mortgage payment is £1000 per month and I am paying £1000 to rent (notwithstanding that any property I would get in our area for the same cost would not be as nice as our house and I won't have the long term stability!), my ex is saying that as she’s paying off the mortgage I won’t be entitled to the equity whilst she is paying it. But I’m only having to rent because she is refusing to sell our house. I could understand it if I earnt more than her, or if the children spent more time with her, but we earn the same and share the childcare 50/50.

Well if she doesn't want to sell the house you both own then you should move back in and pay half the bills as you are legally entitled too. If she isn't happy with that then remind her you were happy to sell and go your seperate ways but if she wants to continue to own a house together then it's financially sensible for you to both live there.

pinkshoes

dt04 said:

Thanks for the replies, I did actually offer to buy her out of the house and take her off the mortgage, but she refused (she'd already arranged to move back in at this point, but I did ask what would happen if the scenario was flipped). Her reason for not wanting to rent is that the 'maternal home' shouldn't be rented accommodation. I'm happy to live in a rented 2 bed flat, whilst she lives in our 3 bedroom house, as long as we continue to share in the equity of the house moving forwards.

I believe her pension would be worth more than mine, but I wouldn't want it to be split to be honest.

If you earn the same amount, how could you afford to buy her out and not the other way round?

Personally I would move back in.

A "maternal" home?? What is that?? Does she mean marital home???