Q I bought a house a year and a half ago with my boyfriend of 11 years. We split up two months ago and I plan to buy him out of the house, which cost £450,000.
I put down £140,000 towards the purchase and he put down £10,000. My deposit included a £50,000 interest-free loan from my parents. We paid the mortgage and the loan back equally each month.
We drew up a deed of trust which made us tenants in common in unequal shares. It decreed that we got back our cash deposits and split the profits 50/50. There was a further agreement that his share of the house should adjust as he paid the money back to my parents. So we have paid £7,500 each back to my parents and reduced our mortgage from £315,000 to £305,000.
We made a further, verbal agreement that I would get back my deposit as a percentage of the sale price and that I would have a share of his other house. We are still amicable and I’m happy to drop any claim to his house as long as we split our house fairly. I think it’s unfair that he will make a far greater return on his investment than I will under the original agreement.
Can you advise on the fairest way to split a house in this situation? AB
A I’m struggling to see why, if you are both repaying the mortgage and loan from your parents 50/50, your ex-boyfriend’s share of the house should go up as he hasn’t contributed more to the loans than you have. But I’m also unsure why you have included the £50,000 interest-free loan from your parents in the figure for your deposit. As you are both paying it back, it should be treated in the same way as your mortgage – ie as a cash contribution to the purchase by a third party. This would mean that your deposit was £90,000 rather than £140,000.
If you ex-boyfriend is happy to ignore the declaration of trust you had drawn up, you could consider taking your total contributions to the purchase of the property into account when working out your share of it. So in your case, you have contributed £90,000 in cash, £7,500 to repaying your parents’ loan and £5,000 towards paying off the mortgage debt (not including interest).
Your ex-boyfriend has contributed £10,000 plus the same as you for the loan repayments giving total contributions from both of you of £125,000. Your share of what was left after repaying the mortgage and the loan from your parents and other sale costs would therefore be 82% (ie your contribution of £102,500 divided by total contributions of £125,000 multiplied by 100) and his share would be 18%.
As you want to buy your ex out rather than selling outright, you would need to take on his share of the mortgage and parental loan and pay him 18% of the value of the property less the outstanding loans. So if, say, the house is now worth £500,000, you would have to pay your ex £28,800 (ie 18% of £500,000 less the remaining mortgage of £305,000 and remaining interest-free loan of £35,000).
