#PropertyOwnership #TenantsInCommon #FinancialPlanning #RelationshipAdvice
Hey everyone! 👋 I need some advice on a situation I’m facing with my girlfriend. So, she has this massive property in her name and we’re planning on moving in together. Here’s a bit of background:
– My girlfriend owns a 4 bed house with a large deposit from her inheritance
– We want to live together in her house, just us two
– We don’t want to get married but plan on having kids in the future
– She suggested changing the house to a ‘tenants in common’ agreement to protect my finances
I’m not very familiar with this type of arrangement, and I’m wondering if it’s a good idea. Would love to hear your thoughts and experiences! 🤔 Let’s share knowledge and support each other in navigating this kind of situation.
My suggestion as a possible solution:
– Seek professional advice on a ‘tenants in common’ agreement
– Consider consulting with a financial planner to discuss long-term financial implications and protection
– Have open and honest discussions with your girlfriend about expectations and goals for the future
Looking forward to hearing from you all! 💬✨
This is too important for internet randos, as much as I love em.
You both need to seek independent of each other paid for legal advice.
You say you know what divorce can do, you should see the shit show when people are not married!
Honestly, I’d approach this in stages.
Stage 1, being a renter.
Pay rent that covers 1 room, max. And a share of bills. Not maintenance of any kind.
That should be cheap for you expensive for her. That’s fair as all capital growth is hers.
You should invest the difference into your savings / pension etc.
Stage 2 Kids.
Buy into the house. Joint mortgage, you put in equity, she puts in (well pulls out realistically) equity. With aim of equal shares of house.
Her other assets should pay her half of bills etc.
This keeps assets split, but bills also split equally.
There is a good question of how to value the mothers time on top. Assuming it’s significant assets she has / gets I would have it as equal to officially not claiming on those assets.
The smaller the assets she has the smaller the %bills to cover.
However this is my personal view on what is fair and equitable. I could be easily influenced with more info / context / discussion.
Sounds like a smart move, but get a professional to review the agreement ASAP.
Without marriage, you and any children may be at a disadvantage if you separate or your partner dies. I think you should both get some legal advice.
I think if you have kids, you’re paying into the capital of the property and likely the main breadwinner in the future, you’re going to be financially wedded whether you’re legally wedded or not.
One step at a time though. With the best possible intentions, try co-habiting first and see if the relationship has the legs to go the distance; maybe your attitudes will change along the way.
I’m pretty sure you could get a deed of trust agreeing that you both get the correct amounts.
Ie, in the event of a split/sale she will get the first £x (relative to her current deposit and equity) and then the rest (from when you move in) would be split 50/50.
It protects you, protects her and ultimately can change later down the line should you have kids
As a child of divorced parents myself – It’s not the legal asset-splitting that’s hard on the child. It’s the fighting, the splitting, the parents no longer being together, and the difficulty in understanding why that is hard
Once kids are involved a split will be painful and hard if you’re married or not, there’s no avoiding that by not getting married
You both need to speak with solicitors and get expert advice. There’s a variety of different arrangements you can make and who knows what the future holds – tenants in common is one option, but depending on your relationship joint tenants may be more fitting. Great to put things in place for the future and hopefully having kids, but you should also consider your position at the moment and worst case scenarios (it is a reality, although that does sound very bleak).
https://www.gov.uk/joint-property-ownership
Getting married is the best option for you. Her assets become marital assets
Putting aside the romantic notion of marriage. What it really is is a legal contract between two people (hence you sue for divorce).
If you don’t want to go down that route, set out a clear contract of what will happen when. And also think about what if you split up and any repercussions on children.
You says that both your families have been damage by divorce. Not setting this in writing now will make any separation worse than a divorce.
I’m in this position with my missus but I own the house and she basically rents. However…. it’s now been 8 years and we have a kid and another on the way. She’s never been interested in owning a share of the house and I’ve always only ever charged her for bills as I make 3x more. I think based on the law she’s entitled to something and if we ever did break up I’d make sure she was comfortable.
The last time I remortgaged they made her sign some paper work to also say she has no right to the house but again would always sort her out if anything happened. I like that you both don’t want to get married as I agree it could be messy. Interested in what the solicitor decides as for example I wonder if you could use your deposit to pay off some of the mortgage and then get a higher % in the agreement you plan to do.
When me and my girlfriend bought our flat, we had quite different sized deposits and so we took ownership as tenants in common with an unequal share. That meant if we’d split up we would have got something approaching our deposit contributions back.
The maths is pretty straightforward – and no need to regularly change ownership shares. As long as you’re both paying the mortgage equally from now on, you can say that she owns whatever the current equity is + half the outstanding mortgage, while you own just half the outstanding mortgage.
So if the house is worth £200k, and the mortgage is £100k, then she owns £100k equity + £50k, you own £50k – so the ownership works out as 75% her, 25% you. You’re both equally liable for the mortgage going forward. Over time as the mortgage is paid off you’d build equity
If the house was sold immediately, you’d get £50k, she’d get £150k, and you’d split paying the mortgage back – so all of your £50k plus £50k from her. She’d be left over with £100k – ie the equity of the house.
I will say though – once kids are involved it changes. We got married because there are a lot of legal benefits to being married when you have kids – especially if one of you is seriously ill or dies. Now we own our house as joint tenants.
This is one of the times when questions on here go into relationship advice.
The short answer is that you need independent legal advice as 2 separate individuals
The longer less money oriented answer is that divorce didn’t break up your families, a break up did that and they are messy with or without a marriage contract (in fact can be more messy without one). Marriage gives you legal and monetary production and benefits that no amount of other paperwork can 100% replicate. I’d make sure you are willing to sacrifice those to not be married (for example spousal transfer of inheritance tax allowance)
I’m in the ‘if you are planning to spend your life with someone you can’t hedge your bets, you are in or out’ camp. So I’d be looking at what you want or envisage as assets or money in 30 years. And I say that as someone who was your partner in the scenario. I owned a house, my then boyfriend moved in we split the bills and I paid the mortgage. At some point around when we were planning the wedding we just opened a joint account and paid for everything together. We sold that house and bought another (our first as a married couple as joint tenants). If I still cared nearly a decade later that a large portion of the equity was mine (pre him) I’d be a bit worried
You’ll most likely need a co-habitation agreement and/or a declaration of trust.
Your girlfriend would be making a disposal for CGT purposes. She’ll get PPR on the portion of the house she used privately and should qualify for lettings relief on the rest.
https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2023#letting-relief
Your partner isn’t understanding tenants in common though.
What they seem to be suggesting is you start out with a low %. There is no reason to do that. Can put it as joint tenants and have 50% each (perhaps with either you paying a deposit to match her current equity or her getting the current equity back before the remainder is split 50/50) or tenants in common as say 40/60 or whatever split yous agree. But technically if you hold it as tenants in common 60/40 (as example split only, to demonstrate) then any costs (mortgages, repairs etc) would be split to the same proportion. Which is why I think your partner doesn’t really understand tenants in common.
But agree cohabitation agreement is the way forward. Protects you both in the event of a bad break up. Much easier to agree splits with a partner when everything is dandy.