Partner buying me out - HELP NEEDED

JJmcClure

Hello everyone

New here and after some assistance

Have split up with my partner and she wants to buy me out of the flat we own

We bought the flat four years ago for £123,000. We've got £104,829 left to pay. I left home last summer but have continued to pay the mortgage and have not missed a payment ever.

I've yet to ask her to get it valued, but a similar flat two doors down went for around £180,000 recently.

She's going to have to remortgage and take on additional borrowing and has offered me £22,000 and says she'll pay all the fees and get the lender to sort the documents. That way, she reckons, I won't need to get a solicitor myself, I'll just have to sign everything over to her

I want her to have the house and am happy to sign over everything to her, but I'm just wondering if people think the offer of £22,000 seems fair or am I due more?

She has no savings, so I know she's going to have to remortgage and take on extra debt to pay me off, so while I am keen not to cripple her financially (and I really want her to have the house - it's near her work, nowhere near mine, and it was my decision to leave), I of course, want to make sure I am not just surrending a large amount of cash

How is the figure you offer someone worked out?

Is it new value - minus what's owed of the mortgage?

Do the deposit and what I've paid into the mortgage for four years come into account? I also put a fair amount of cash into doing the place up - does that count?

I don't want to get a solicitor to fight for a few extra grand I'll then lose in fees to them, and in the process financially cripple my ex and maybe force her to sell

But in the same breath, I want a fair payment from this as well

Any help greatly appreciated

fraser

difficult stuff

I would review the sold prices for the postcode in your area using the land reg sites e.g. nethouseprices.com and http://www.housepricemaps.co.uk/ to see what the market rate for a property is. also a full and frank breakdown of what both parties have invested into the property is required.

then apply a fair formula to achieve a fair value for you and also possibly a discount for an easy transaction i.e. her acting as a guaranteed buyer.

it is a fine line to tread but having the info at hand and having a reasonable review together is probably the only way to do it. it could of course descend into a disagreement pretty quick...

good luck

Trying_to_be_good

In a fair world, I would say you are entitled to the proportion that you've paid i.e. if you put in a larger deposit, or paid more of the mortgage, you should be entitled to more than half the equity (sale price less outstanding mortgage). However it's often much easier to split it equally.

Have you looked at buying your partner out of the house? Is she going to be able to raise and afford the mortgage required to buy you out at a fair price?

JJmcClure

Everything has been 50/50

Deposit, payments, even money spent on improvements

I do not want to buy her out. She works five minutes' walk from our flat, whereas my work is an hour and a half away on a train.

I've moved nearer to work and am happy where I am, so I want her to buy me out

The relationship ended badly, and I don't want to financially cripple her but am thinking I am due more than the amount she's offered

She has no savings I am aware of, so she is going to have to re-mortgage and get additional lending to pay me

danm

you owe roughly 105K and the place is worth roughly 180K. so assume 75K equity.

If you allow £5K for 'costs', then i would say you are entitled to closer to £35K (half the remaining £70K)

takoo

Hi JJMcClure

I admire your concern for your former partner and respect your wish to be fair to yourself.

I am assuming that you paid equal shares of all expenditures.

I suggest you establish in order the following:

• the principles for working it out
• the total capital input ie cost, stamp duty, fixtures and fittings, surveyor's fees and legal fees and costs
• the total improvements etc input (more capital) initial repairs, improvements
• if you did not both share outgoings equally workout any imbalance due to the party - council tax, heating, lighting, water rates, insurances, wear and tear repairs

You could add interest from the dates of all the expenditures if they were not paid for equally (as a principle - if accepted).

If everything was paid equally you (but you paid for some improvements)
I suggest a calculation on the lines:

Open market value of the dwelling in good condition
Less legal and valuation/ surveying costs for agreement etc and transfer
stamp duty land tax (if any)
estimated repairs to put in order (probably none)
Equals Sum to be divided between the two of you. = £56,000 (say???)

Your half share = £28,,000 (say)

Add half rental value to be paid for x months' occupation (you paid share of the mortgage but vacated and had to pay rent elsewhere)

Add / subtract half of imbalance for outgoings not paid for equally plus interest .

I am not involved in the emotions of the situation but have tried to cover everything in a dispassionate way. If the shares of the mortgage were not equal some other proportion needs to be calculated on the 56 grand.

Once you have the figure of the cold approach you can afford to be warmhearted and offer figure which takes in your values for your partner.

Hope this helps

Takoo

takoo

Back again

The formula left out the improvements you paid for so you need to add:

• improvements plus interest from the date of each

Takoo

zzzLazyDaisy

It is easy to work out what you are entitled to.

Assuming the house is held in joint names (that is joint tenancy not tenancy in common - you can check the land registry on-line for a small fee) then you both own the house equally, regardless of who paid what.

So you need to get a realistic valuation, taking into account the costs involved in selling the house if you can't agree on a figure (Estate agents fees, HIP report), deduct the amount outstanding on the mortgage, and the remaining equity should them be divided between you, perhaps with a concession to the fact that she is paying the solicitors fees.

Also, bear in mind that if she cannot afford to pay what you believe to be a fair price, the house will have to be sold, which will mean mortgage liabilities for however long it takes to sell it.

Rick62

Hi, you say a similar place recently sold for £180k, however is this the actual sales price and would it still do so well in the current market? Assuming you actually sold for 7% less (typical discount of actual vs asking price) and if you had to then pay EA fees you would then be left with about £29k to £30k if you split the remainder 50:50%. Assuming deposits and other contributions equal she should therefore be paying about £29 to £30k.

However also taking account of selling immediately, rather than marketing for months, reduced costs and hassle then a discount would be reasonable, giving you about £26k to £27k I reckon.

So her offer seems a bit low, based on what you say its worth. I would ask her how she gets to this figure, then giving your calculation showing about £30k and then see if you can negotiate to nearer £25k. It sounds like you're trying to be fair, but it should also be reasonable to both you.

going2die_rich

Something to bear in mind is that if a Flat that went for £180k anytime before the last few months (6 or so), "might" (most likely) won't go for £180k in today's climate with the "credit crunch". So I'd use that £180k figure losely and don't trust an estate agents valuation as they would obviously overvalue it to get your business like they always do.

Another thing to think about, is will your ex actually be able to get a mortage on the multiples required on her own? Mortgage multiples have been dropping in most places now. So what you might have been able to borrow last year is going to be less than they will loan you now. It might be a case of just having to sell the flat on which could take a while right now.

arthur_dent_2

Allowing for there being a sale price of £170,000 and £5000 costs, then I would say that £30,000 is a fairer offer. If you are being nice, or feel that you owe this woman something then a little lower perhaps but £22,000 is in my opinion too little.