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Original poster

Is this fair? It's a money one

63 replies

Oldladyshoes · 17/07/2024 15:02

First post but long time lurker.
This is not my problem but a friend of mine who asked if this scenario is fair. I will try to present as neutral as possible.

A and B have been in a relationship for 5 years. Both are mid 50s and divorced. No plans to marry again. Both have young adult children from their marriages who all work and live independently.
A is mortgage free but does not work. Medically retired from public sector job a couple of years ago, receives pension.
B has a mortgage. Semi-retired ie retired from public sector job a few years ago and receives pension but works part-time in a different job (lower salary).
Last year B's house needed some major renovation doing which meant they could not live there while work was being done. As B spent most of their time at A's place anyway it made sense to move in for the couple of months or so that the work would take. All was good in the relationship so next step was to continue living together and B to rent out their property once completed.
A arranged for a co-habitation agreement to be put in place which B was happy to do. Agreement states that everything would be 50/50 eg all bills (food, utilities, living expenses) etc., neither would have a claim on each other's property.
A also asked that B pay 50% of the rental income from B's property to A. This meant that once B's mortgage was paid for the remaining income would go direct to B, e.g say the rent is £1000, mortgage is £500, so remaining £500 went to A. B did query this at the time as it felt unfair but A's argument for it was that B's mortgage is being paid for by someone else and remaining money would be saved for 'their future'. As A had arranged the agreement via their solicitor, the solicitor advised B to have their own solicitor to look at agreement as well but (stupidly) B declined as they were happy enough with it and had other stresses to deal with at the time (no excuse but hindsight is a wonderful thing).
Unfortunately both A and B have had to deal with some significant stresses in recent months (none of which are their fault, just unfortunate life circumstances) which has had an impact on their relationship. It seems likely that the relationship is coming to an end, so B has been reflecting on the financial aspect and wondering if they were taken for a mug with regard to giving A all the rental income. B is not planning to make a big issue of it, nor is it the only reason for the split, but they know they can't really question it or ask for any of it back (their 'future savings' which in reality haven't been saved at all as A likes to spend money). So, I just wondered what MNers thought of this set up - does it sound fair to you?

OP posts:
Original poster
Oldladyshoes · 17/07/2024 17:25

To clarify, B is paying 50/50 on all household costs plus giving the rental income. If B was just a lodger then rent would cover those costs, not be charged extra. B accepts they have been an idiot but up until recently this has been a very loving relationship which seemed to have a future.
A can well afford to live alone - once all household costs have been paid they still have over half their pension.

OP posts:
BettyBardMacDonald · 17/07/2024 17:18

If I were B, I'd run for the hills.

What if anything does A bring to this relationship??

auntpanty · 17/07/2024 17:12

A should have asked for rent.
At most A could reasonably request 50% of profit but also need to take into account repairs/upkeep would A be contributing?

I think B got a rough deal although arguably is better off than when living separately

Scarletttulips · 17/07/2024 17:11

If B is paying for half the costs, as there’s no mortgage then that should be the split. It’s doesn’t matter if B has a house or huge portfolio, should they have given them half the investment proceeds?

So B is paying half the household costs and then another half which is her ‘profit’

And then all the extras - been taken for a mug here.

Madness -

Playhouseyard · 17/07/2024 17:10

B was right to pay A bit it should have been market rent, which we don't know from the figures.
It doesn't matter that there are other costs associated with being a landlord. If B wants to keep the house and rent it out then they should be about to afford landlord costs and rent for themselves without the help of A.

Blueblell · 17/07/2024 17:06

I think A was unfair to take half the rental. There would have been tax and other expenses to pay on the rental income and if the other half is the mortgage payment it really means she took more than half.

YellowAsteroid · 17/07/2024 17:03

Hmm, tricky. A sounds mean, frankly, but I suppose understandable because of a year of little or no income.

The tricky issue is that it is reasonable for B to pay A some rent - but that should be pitched at half the running costs of the home they share, and probably including any running repairs which do not increase the capital value of the property (so not big renovations, but half of, say plumbing repairs).

The problem with the arrangement you outline is that the amount B has agreed to pay to A bears little relationship to actual costs to A of having B in the house, IYSWIM. It's an arbitrary figure.

Original poster
Oldladyshoes · 17/07/2024 16:46

A bit more info, to see if this makes a difference:

Firstly, the figures I've given are not exact but I do know that the mortage on rental property is about half of the rental income. I'm not sure of additional costs but there are agency fees and other outgoings etc. B also spent a significant sum on the renovation, about £40k, most of which was necessary but there was bit extra spent on refreshing decor. B has no desire to be a landlord and has ended up finding the whole process hugely stressful and regrets getting into it.

As mentioned A is medically retired. This happened a couple of years ago and was not a simple process. My understanding is that there was a period of time from when A's sick pay ended but the pension was not approved until about a year later and this was understandably a financial strain for A. Although not living together at that point, B helped A out financially at that time - A told me that B was very generous and supportive.

Since living together, despite getting the remaining rental income, A regularly pleads poverty. B is the one who always pays for meals out, trips away (nothing extravagant, both prefer small UK holidays) etc. B has done this happily until recently when reflecting on their finances. As someone else alluded to up thread, B has felt more like a lodger than a loved partner in the last few months.

Re their future plans. A is hoping to move some distance away to be closer to family. B was agreeable to this and planned to move with them but the house would continue to be A's asset. Although downsizing ( A is currently in a large family house) the area is more expensive than where they are at the moment and so the smaller properties cost the same as the current house, so no profit to be made in downsizing. A's small amount of savings would be used on removal costs. B's concerns are that A is looking at properties that require a lot of work and B is wondering how that would be financed - 'their savings'?. But in the event of a split B would have no claim on any part of the house.

OP posts:
Cem82 · 17/07/2024 16:35

Personally I think they should have looked up the coat of renting a room in a house in the area and B should have paid the lower end of that if A really wanted rent - half a house’s rent seems a bit much to give away as things being used would depreciate them and mean they’ve to be replaced sooner, also I am sure A’s kids visit, store stuff there etc…

RagzRebooted · 17/07/2024 16:30

MyOtherCarisAVauxhallZafira · 17/07/2024 15:17

Surely if it was for joint future plans half each would be reasonable.
I get why A wanted some of the money, otherwise B was living rent free in A's home while making a profit on their own, which they wouldn't have been and to do if they still lived alone or in a property with rent/mortgage

Yes I thought I'd misread and that it was half the rental income after mortgage payment, which would have been more fair I think. I think B should have paid some rent, but having to give all their rental profit to A seems unreasonable.

MayoMayoMayo · 17/07/2024 16:29

Where would B have been living if not with A? And how much would they have paid in rent?

If at their house that they let out then surely it would be right that A should get half the rental amount?

Thedayb4youcame · 17/07/2024 16:26

MyOtherCarisAVauxhallZafira · 17/07/2024 15:17

Surely if it was for joint future plans half each would be reasonable.
I get why A wanted some of the money, otherwise B was living rent free in A's home while making a profit on their own, which they wouldn't have been and to do if they still lived alone or in a property with rent/mortgage

Surely it is this. Just B paying rent to live in A's home.

And if it's true it was to used for their future, then A will be returning some or all of it anyway.

RaspberryBeretxx · 17/07/2024 16:09

I think it should have been 50/50 after mortgage payment. That would have been fairer. Although it does depend a little on their income as well. If B's pension plus part-time wage came to £3,000 and A's pension was £1,000 (for example) then I think the £500 profit from rental going to A would be fair, imo.

Assuming relatively similar income, I think it's usually best to ensure both parties are better off to an equal amount. So, both would have saved on bills by living together and both get £250 each rental profit in a 50/50 split on rental profit.

JurassicClark · 17/07/2024 15:55

Was the amount received in rent really very much more than the mortgage plus costs?

Shared living expenses benefited both parties, as both were better off than paying full whack living separately, so we can ignore that.

B had gone from paying his/her mortgage while living at home to living elsewhere and receiving rent in excess of the mortgage. So B’s net income had gone up while also owning more of the house (as the mortgage is paid off and more of the house is owned outright).

In that scenario, B’s benefiting from both zero mortgage and extra income. A is getting nothing.

Under the agreement signed, B is getting mortgage paid and A gets extra income. I can see how that looked like a fair benefit to each.

I wouldn’t have done it, because if I cared enough to share my home with my partner I wouldn’t be trying to benefit financially from them when my housing cost hadn’t increased. However, if ring-fencing was important to them, I can see A’s perspective.

GabriellaMontez · 17/07/2024 15:50

HeChokedOnAChorizo · 17/07/2024 15:45

But they wouldnt have both been £500 a month better off as B had to deduct the mortgage from the rent payment, the total left was £500 which B gave to A, not £250 each which would have been fairer.

Show quote history

It depends on the mortgage amount and rent amount. These are example figures.

The point remains... they should both, benefit equally from the sharing arrangement. (Financially)

Mumofteenandtween · 17/07/2024 15:46

I’m not sure it should be 50:50 on the profit. As B would be reducing their mortgage with the mortgage payments and so effectively saving from that.

50:50 on the rental income once the interest payments have been taken into account would be the most fair.

HeChokedOnAChorizo · 17/07/2024 15:45

GabriellaMontez · 17/07/2024 15:29

They were both £500 a month, better off using this arrangement (than before they lived together). It's fine.

Otherwise A would have seen no change in income. B would have been 1000 better off. (Using OPs example figures.

But they wouldnt have both been £500 a month better off as B had to deduct the mortgage from the rent payment, the total left was £500 which B gave to A, not £250 each which would have been fairer.

MissUltraViolet · 17/07/2024 15:42

I am shit at maths but from what I can work out, the only fair outcome if they split up is - B works out how many £500 (for our future) payments they have made and A gives B half of it.

That way A had someone paying half their bills AND an extra £250 cash a month and B was having their mortgage taken care of, paying half of A's bills and also an extra £250 cash a month.

Janieforever · 17/07/2024 15:37

Depends on the figures, how much of the rent was actually foe the mortgage.

GabriellaMontez · 17/07/2024 15:36

Ivehearditbothways · 17/07/2024 15:35

But A would have a decrease in what they spent on bills and living expenses. So A absolutely had a benefit by the move and didn’t need to steal money from B.

Show quote history

But B would also have had a decrease in bills and living expenses.

Ivehearditbothways · 17/07/2024 15:35

GabriellaMontez · 17/07/2024 15:29

They were both £500 a month, better off using this arrangement (than before they lived together). It's fine.

Otherwise A would have seen no change in income. B would have been 1000 better off. (Using OPs example figures.

But A would have a decrease in what they spent on bills and living expenses. So A absolutely had a benefit by the move and didn’t need to steal money from B.

GinForBreakfast · 17/07/2024 15:34

Yes, B was a mug but what's done is done, no point in dwelling on it (but should learn from it!).

Ivehearditbothways · 17/07/2024 15:33

B sounds like an idiot and really needs to asses how vulnerable they are before getting into any other relationships. What a ridiculous thing to agree to.

Ponderingwindow · 17/07/2024 15:31

Let’s start with the fact that as a landlord, the mortgage is not the only expense. A landlord needs to be prepared to cover any number of repairs and to perform regular maintenance on a home. There may also be periods of time with no tenants in place.

taking half the rental income net of the mortgage may not even leave B left with enough to cover these operational expenses.

GabriellaMontez · 17/07/2024 15:29

They were both £500 a month, better off using this arrangement (than before they lived together). It's fine.

Otherwise A would have seen no change in income. B would have been 1000 better off. (Using OPs example figures.