Friend to enter into a joint venture, do up my house, split profits

Emmia

Honestly I think if the friend wants to refurb a house, he should buy the house themself. I think this is likely to be a disaster, for your friendship and financially.

mlz1413

https://forums.moneysavingexpert.com/discussion/comment/82089019#Comment_82089019

Yep. Which is why I said 'via a legal agreement'.

I didn't list the pitfalls because it's not clear what OP will do.

I think everything about the options the OP is listing are fraught with dangers! Selling your house for half it's value with the hope it will be done up and you see some money afterwards is about on a par with being a LL in the current climate!!

sherlock228

for CGT purposes please clarify:
its been a rental for 20 years … I've lived there for 17 years out of 22

Those statements are incompatible.

Gut feeling (guess) selling half "now" would lock you into current tax rates (likely to change?)
28% now compared to (assumed) 40% rate in future - you say you are high risk, some would see having to appreciate by an additional 12% just to stand still as being high risk!

snickpan

https://forums.moneysavingexpert.com/discussion/comment/82089293#Comment_82089293

I was holding my breath for this reply! I had lodgers, it became an HMO, I had the top floor then moved out.

_Penny_Dreadful

I’m with @eddddy, I’m curious what renovations your friend is planning to do that will increase the value by £140,000.

To get that size of increase he’d need to be making the property larger with an extension or a well thought out an executed loft extension. Simply tarting the place up and perhaps installing a new kitchen and bathrooms isn’t going to lead to that kind of gain.

You mention your friend had successfully done up two flats. My guess is that any gain is due to the local market, not his DIY and interior decoration skills.

Herzlos

What is the £1k/month for? Rent? His share of the house?

Why not just get a value now and an agreement that he gets the difference between that and the selling price in exchange for doing the renovation? That keeps it pretty simple and reduces your risk. You'd probably want to factor in cost of materials somewhere - is he paying for that out of his profit? Are you splitting it?

Bigphil1474

OP, if I'm right, you are planning to allow your friend to renovate your £560k house over possibly the next 2 years with the hopes of gaining a sale price of £700k minus his costs. Even at only £50k costs, the profit will be £90k, which is £45k each. If you sold for £560k now, and stuck that money in various investment accounts, you'd gain that much over 2 years without the hassle (minus your CGT of course). If he was my good friend, I'd be tempted to either offer to sell it to him for £500k now, or just sell on open market.

snickpan

good point, although he is funding the renovations himself, so he's suggesting I could clear £70k

snickpan

https://forums.moneysavingexpert.com/discussion/comment/82089787#Comment_82089787

the £1k is 'compensation', or a stand in for the interest that I would have got per month, if I'd sold half the house to him. He's funding renovations himself

snickpan

https://forums.moneysavingexpert.com/discussion/comment/82089675#Comment_82089675

small extension (replace 'lean-to conservatory)