Investing in Partners House....getting confused.

wyattjnr

Hello all, so I am getting in a muddle with trying to work out how to progress forward, if even to move forward with potentially investing in my partners house.
We are unmarried and I moved in last June with the intention of paying rent and bills towards her mortgage and running of the house.
The house was purchased in 2021 at £660k and a £240k deposit was put down.  My partner has substantial savings with the intention of carrying out redevelopment works to the house. As time has gone by it has come to the realisation that the level of money she has does not touch the sides of what needs to be done.

I am due to come into some inheritance due to the loss of my mother to the level of £250k and she has suggested I invest into her house by contributing £75k towards a % of the house. It is likely valued at £850k now so I would have around 9% of the house. I would then contribute 9% towards the re-development costs. So I could be in for about £100k and only own 9% of the the house and therefore 9% of any uplift in the value.

I can't get my head around this but it does seem difficult to commit due to the amount of investment for such a little return.

Am i missing something? Is there an easier way of calculating the best way to invest into a partners house?

Any help is appreciated.

Keep_pedalling

If you are putting money into the house you have a beneficial interest in it, so you should not do this without being added to the the land registry as a tenant in common with a deed of trust drawn up showing the split in ownership.

As we are talking about your home this is not an investment.

secla

Its not an investment that you can easily take your money out of either.

As said to do this properly you would really need to go on the mortgage/deeds and have a solicitor draw up the split and what each person takes in the event of a sale

gwynlas

Whilst it seems to be a sensible way to pay for work to be carried out should you split up at any stage would she be prepared to sell up to repay your investment?

silvercar

I would suggest if you are contributing 9% of value plus paying towards the mortgage and maintenance, you should be owning more than 9% going forward. 

At the very least 9% capital is going to be what percent of the improvement costs? And by how much does that increase the value eg if you are paying 75k and the improvement costs 150k you are paying half the improvement costs. If the improvement increases the value from 650k to 850k then you have added half of 200k =100k to the value and your percentage should reflect that. 

Same with contributing to the mortgage, if it’s a repayment mortgage you are contributing to the equity in the property and your percentage should reflect that.

swingaloo

Only 4 months ago you said this-    Suggestions of what to do with a lump sum — MoneySavingExpert Forum

In your place I wouldnt rush to commit, the relationship is fairly new and if it all ends badly you could struggle to get your money back and she could be in a position where she has to sell her home.

Albermarle

 My partner has substantial savings with the intention of carrying out redevelopment works to the house. As time has gone by it has come to the realisation that the level of money she has does not touch the sides of what needs to be done.

This would worry me. Major redevelopment can be a money pit. It already sounds like the initial plans/costings have been blown out of the water. Why is that ?

RAS

This is completely wrong. If your partner put in £240k originally, how much is the current amount of equity? Get a RICS valuation and deduct the remaining mortgage. Say she now has £450k equity, and you contribute another £100k, plus her saved £50k? So you own one sixth of the equity and can argue about the division of the increase in value due to the redevelopment, based on another valuation. Anything up to 2/3rds if you contributed that portion of the redevelopment money.

Personally I wouldn't because even with a deed of trust, it will be very hard to extract your portion of the assets if the relationship fails. Out on your ear with no savings?

Bookworm105

as post above, your initial calculation is wrong

75k is not 9% of current value and 9% most certainly is not final share of the property after it has been redeveloped at a further cash cost to you of 100k 

as you are unmarried, you should not do this.

wyattjnr

Thanks for all your suggestions.
If I did go ahead with it, is someone able to work out with simple calcs what % I would suggest to my partner for a £75k investment?