When buying a house goes pear shaped

JustAnotherSaver

So a relative of mine & their partner (not married, not engaged) are looking to buy a house this year.

Relative's partner earns twice what relative does as they've a decent paying job.

From bits they've said to me, there's various red flags.

Now I hope my suspicions are wrong & they go on to live a wonderful long life together until they're old & grey.

However, if i'm right then I want to make sure my relative doesn't end up getting a raw deal as far as the house ownership / money goes.

Now rightly/wrongly it's my understanding that if you're married then basically 50/50 split.

What about in this case though when they're not even engaged?

So they go buy a house. One puts down say 80%, the other puts down 20% (i'm just throwing random figures here).

Bills i actually think will be split 50/50 from what's been said.

But it all then goes wrong & let's assume there's a nasty break up - what then happens with percentage rights, so on & so forth?

MaryNB

They should agree a % split and sign a Deed of Trust when buying the property. Don't leave it until there's a break up to sort it. 

Slithery

That all depends on what it says in the deed of trust they get drawn up when purchasing.

Also, you're wrong about what happens in the case of a marriage split. If it's been a long marriage then the starting point is a 50/50 split, but this will be adjusted by the courts taking into account the whole of their finances, childcare responsibilities etc.
If it's a short marriage then the courts will usually put both parties back into a situation that's fair according to their original financial input.

JustAnotherSaver

Well since I've advised them long since to get their partner to take out a LISA who then won't as they 'earn enough' and can 'save enough as they are' and 'if you can tell me how it'd benefit me...' (yes I know I know, don't even need to go there as I know!)

It makes me ask the question, what happens in the event that they don't get anything drawn up? 

One puts a wedge down, the other forms say 20% of the deposit. 
Bills get split 50/50 perhaps. 

Then say 5 years down the line, still not married or engaged (or maybe they will be) then what (in terms of what my relative could walk away with in this situation, assuming a bad break up). 

Why assume a bad break up some may ask? Well what's the point in assuming a super nice one where they agree to make both parties happy - because then I wouldn't be here asking a question. 

Exodi

JustAnotherSaver said:

Well since I've advised them long since to get their partner to take out a LISA who then won't as they 'earn enough' and can 'save enough as they are' and 'if you can tell me how it'd benefit me...' (yes I know I know, don't even need to go there as I know!)

Yeah, not too much to say on this, their argument is obviously ridiculous. Who wants free money ay?

JustAnotherSaver said:

It makes me ask the question, what happens in the event that they don't get anything drawn up? 

This is obviously very common in conveyancing. As part of the buying process they will be asked how they intend to hold the property - as 'joint tenants' (effectively 50/50) or as 'tenants in common' (split to be defined), they have to decide this for the solicitor to proceed.

Most people putting in significantly more would opt to be tenants in common, with a 'Deed of Trust' drawn up, that details how the money would be split if they broke up.

It could be that they get their deposits back - and then the money is split 50/50 (or some other variation - whatever they decide between them).

It would be very irresponsible to purchase the house as joint tenants, if your relative didn't intend for the money to be split 50/50 in the event of a break up (though sadly this happens all too often - people don't like planning about breaking up for obvious reasons...)

In my opinion, they should absolutely intend to own the house as tenants in common with a deed of trust - and should also talk to their partner about this - who should be understanding given the sums involved! If not then I think it would be a major red flag!

Exodi

Exodi said:

In my opinion, they should absolutely intend to own the house as tenants in common with a deed of trust - and should also talk to their partner about this - who should be understanding given the sums involved! If not then I think it would be a major red flag!

I've never quoted myself before.. how funny -

But to follow on from this - there's actually a thread doing the rounds now where the partner putting in a small deposit reckons the property should be owned as joint tenants, worth a read on peoples views on this!

https://forums.moneysavingexpert.com/discussion/6342765/money-moral-dilemma-i-put-in-a-much-bigger-deposit-but-should-we-split-the-property-equally/p1

GentleGiant01

If one partner earns much much more it isn’t fair to split bills 50/50, I earn 70k more than my partner does and most of the luxuries I have like expensive sky packages and multi room TV’s they wouldn’t have if I didn’t want them. They would be in spending their whole wage on bills and i would have a few K spare each month 

JustAnotherSaver

I agree completely with you. 

My wife and I earn fairly similar amounts. Regardless, our wage goes in our joint account and it's just considered 1 big (or not so big) pot that STUFF gets bought with, be it bills, chocolates or whatever. The moment we got married there was no my money, your money, it was our money. 

Other couples have their own setups that may or may not work for them but I'm in agreement with you. 

Relative showed me partners wage slip one time (had been sent it via WhatsApp so that's how they had it). They get £3.0-£3.5k per month, or rather they did 2 December's ago. 
Relative for comparison gets about £1.2-£1.4k per month. 

As I don't talk gross, all values are net. 

ariarnia

i think there's a difference between housing bills and other 'life' bills. if the couple are concerned about equity split then it might make sense to split housing bills like the mortgage and maintenance or improvements equally or with the person who paid less deposit paying more so the equity balances over time but i agree general living costs like food and the costs you'd have if you were living together in rented are different. we put our money in one pot and then both get an equal amount transferred back into our accounts as 'our' money that we can spend without discussing with the other person which means when i was on maternity i was getting more out of the pot than i was putting in but was raising the sprogs which is important work in it's own right. but what works for one couple doesn't always work for a different couple and that's okay as long as they talk about what works for them.