15 Apr

I'm buying a house with my boyfriend – is 10% a fair share of the equity?

I’m making a cash contribution to the purchase and paying half the mortgageQ My boyfriend is buying a house and I plan to make a cash contribution towards its purchase. The mortgage will be solely in his name as I already own another property (which I plan to keep and rent). The value of the property is £487,000 so I plan to contribute £48,700 plus £1,435 stamp duty in order to own a 10% share of the property. I will then be paying half of the mortgage with my partner every month. I queried whether this was fair as if we were to split I would only walk away with 10%. He will contributing £50,000, plus the remainder of the stamp duty and fees. He has two children and has been through a divorce and so is trying to protect himself as he has mentioned that I already own a home. It bothers me that this arrangement isn’t the fairest way to work this out. Any advice would be much appreciated.CLA I’m with you on the arrangement not being the fairest, because it isn’t. Paying 10% towards the purchase price and then paying half the mortgage each month should make you entitled to share of more than 10% (because part of the monthly mortgage repayment goes towards paying off the loan, therefore increasing your equity). However, I can also appreciate that going through divorce proceedings may have made your boyfriend a bit once-bitten-twice-shy about jointly-owned property, but if that is the case, perhaps he should avoid joint ownership altogether. And perhaps you should too if you doubt the fairness of it all – not least because such a lack of trust can’t be great for your relationship. This might also make sense from a financial point of view. Because you already own a property which you will not be selling, the stamp duty land tax (SDLT) due on the whole purchase price of the new property would be at the higher rate (ie standard rate plus 3%) so your 10% share of the total SDLT bill would be £2,896 rather than £1,435. The higher rate of SDLT will also apply if your boyfriend’s erstwhile family home has not been sold and he still has an interest in it. However, if any agreement about the family home with his ex-spouse has been recorded in a consent order approved by the court, he will be exempt from paying the higher rate of SDLT. Continue reading…

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