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One person buying a house... their partner rents off them?

Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
Hello guys, bit of a long one but it's a bit detailed.

So my boyfriend and I are planning on moving in together/buying a house probably this time next year.

He's just finished his apprenticeship and will be getting his pay from now till September backdated in a large lump sum, including any overtime etc. Also he's got a good whack of savings.

Myself...I am slowly getting on top of my debts, which are now affordable and manageable. It's obviously going to take time but now I've got some disposable income to play with and have even started saving/learning to drive etc.

So the deal is, my boyfriend wants to buy a house and I'm not in a position to be on the mortgage, at least at the moment.

I've lived with someone before and they took the piss majorily. Although they were on the contract they never paid me any rent, occasionally stumped up for food and it all ended in tears and is probably the main reason WHY I'm in debt now. I was young, I was stupid and I've learnt from my mistakes.

The way we've discussed what we plan to do is he will buy the house, it will be in his name and the payments for the mortgage will come out of his account. He will also have the bills in his name. Then I will pay half.

We want to draw up like a contract between us that says that I am renting technically off him but under the understanding that I'm putting in my half of what I would IF I was on the mortgage.

Also I want written in that when I am in a position to do so I will attempt to match his deposit and be added to the mortgage when I've corrected my credit score. Whether or not I pay the equivalent in deposit in one lump sum or add to what I pay monthly to make us square.

Also we want to put into it that if we are to split after x period of time (and as much as I doubt we will, we have to be realistic) that there is some way that although not techncially on the mortgage I'm not left high and dry and he can also afford to keep living there (though a mortgage based on his income alone will take this into account).


Has anybody ever done anything similar to this. I do have quite a fair bit of time to draw anything like this up, but I like to be prepared.

Any advice would be great.

Comments

  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    I can see where you are coming from, but property transactions don't really work like this. If your boyfriend takes out a mortgage on his own, he will be entirely responsible for the repayments and will not be able to count potential "earnings" from your rental payments towards the amount he can borrow. Therefore he must be sure he is able to afford to keep up the payments in the (unlikely) event you split up. You could sign a formal tenancy agreement, but it would not give you any rights over the mortgage.

    Why do you feel you need all this written into a contract at this stage anyway? What you are proposing isn't that unusual. When my OH moved into my flat, we remortgaged. At that point, we transferred the property into joint names as tenants in common.

    Tenants in common means that you own a nominated share of the property, rather than simply being listed as joint owners of the whole. This is particularly useful in circumstances like yours and mine. In my case, because I had owned the flat for several years before my OH came along, we agreed a 60 : 40 split, since I had paid a lot into the property before he came in on the deal. In reality it means that if my OH died, for instance, he could choose to leave his 40% share to his kids and I would either have to buy them out, or sell the property and take my 60% share. This is the legal situation but, in day to day terms, we would still say that we owned the property jointly. What I am trying to say is that there is no need for you to struggle to "match" the money your boyfriend has put in prior to you both taking out a new mortgage - as long as you can agree a fair percentage split.

    Hope this helps.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    I would also add that any agreement which named you as tennant would change the type of mortgage your boyfriend would get from a normal one to a buy to let one as under a normal mortgage agreement your not able to sublet. I can't seen any circumstances other than you going on the mortgage in which you would be able to recover any of your money should you split up.

    There would also be tax implications for your boyfriend as well as your money would technically be classed as income - even if you didn't have a drawn up tennancy agreement and just transfered him money each month this could imply that he was illegally subletting which could compromise his mortgage agreement and also get him into trouble with the tax man.

    I have been in this situation and you just have to trust the person you live with and have faith that you won't split up and accept that if you do you will loose the money. However to get round this we had an agreement where I would live in the flat rent free but would contribute in other ways such as paying for all of the food etc etc - it might be possible for you to make up your half of the household cost through paying bills - though you would have to double check that this again does not imply any type of tennancy arrangement.

    Sorry its not good news but its probably better than getting stuck in a house togeather if you don't think you will stay togeather for ever and ever.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Hey there,

    The situation you are describing lies in the law of equity. It is pretty compelx stuff to be honest and essentially means that someone has a right over property even though it is held in someone else's name. For example because they have made regular payments towards a mortgage or upkeep of it.

    I'm not entirely sure of how the law actually works in this area, so my advice would be to see a lawyer. They can even assist on the actual wording of the contract to ensure that it is valid. You can find a solicitor in your local area using the Community Legal Advice website.

    Sorry this thread didn't get picked up on earlier, but I'm going to close it now as the OP is likely to have overcome this issue by now. However, please feel free to post again StarCrossed if you have any other concerns or just to let us know how you are getting on.

    :)
This discussion has been closed.