Q My partner and I are buying a house costing £385,000.
I will be contributing half the price in cash while my partner will pay for the other half with £22,500 in savings and a mortgage of £170,000 which he will repay. I no longer work outside the home as we have two children so my partner pays all the bills and he also intends to pay for decorating the house.
I want the deed to say that, if we were to split up and sell the house, I would get my £192,500 back and he would get whatever was left after paying off the mortgage. But he is saying that because I will be contributing nothing to paying for the house, the split should be different even though I own half the property and would pay half of the cost of anything that needed doing such as an extension or new windows and doors. Am I being unfair?
RB
A Yes I do think you are being unfair, but on yourself rather than on your partner. If you were to share out the proceeds of selling the house in the event of a split in the way you propose, you would not benefit from any increase in its value. That’s because if the house went up in price to, say £400,000, getting back £192,500 would short change you by £7,500 (£200,000 minus £192,500) because you wouldn’t be getting the value of the half share that you originally put in.
Nor would you though if the house fell in value because getting back £192,500 would mean receiving a larger share of the house than the 50% that you originally paid for.
So what to do? Your first hurdle is explaining to your partner that putting up half the price of your house in cash does not constitute “contributing nothing to paying for the house”. What it does mean is that you each paid for half of the house and so your deed of trust should reflect the 50/50 split.
However, that is fair only if you also use a 50/50 split when paying for home improvements – which should include decorating it – as you propose. Running costs do not enter into the equation when determining your percentage share of a property at the point of purchase.
If you are not going to use a 50/50 split when paying for stuff that adds value to the house, you should consider having what’s called a “commensurate share deed” or “floating deed of trust” drawn up. This type of trust enables you to take account of unequal contributions to the property over time rather than setting out fixed percentage shares. This includes contributions to the purchase price, purchase costs (such as stamp duty land tax and legal fees) as well as home improvements – but still not running costs.
You might also want to think about working out how much you save on childcare costs by not going out to work – a saving which is your contribution to the household budget.
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