Very difficult situation DP v DBro. AIBU for DBro to charge DP rent?

[Jetsetterf]

I'm buying a flat in joint names with DBro. DBro is putting money into the flat as an investment but the flat is being bought for me to live in.

The flat is in a different city to where DP currently lives. I've previously said to DP if he moves in I wouldn't charge him rent. DP has applied for a job in the city where the flat is.

I wouldn't charge DP rent on my share but would DBro be unreasonable to charge DP a reduced rate of rent on his share?

DP is now angry at me because I didn't tell him he may have to pay rent on DBro's share and he said he wouldn't have applied for the job in the city the flat is in if he had known. I said I wouldn't charge him rent, but I have no control over DBro's share and surely he is being unreasonable to expect DBro to let him live there rent free?

It's not unreasonable for him to be annoyed about being charged rent when he's been told he won't be paying and been applying for jobs on that basis...

If he'd known the deal all along that would be different.

I can sort of see how this situation has arisen.
Parents have a finite amount of money to 'give' to their children to help them on the property ladder.
Property is expensive, so they decide 1 lump sum to both dc to buy 1 property. (When its sold, the equity is split 50/50)
So far, so good, assuming both dc pay half the mortgage and maintenance.

Op wants to live in the property so agrees to pay full mortgage and (i assume) any associated costs e.g. maintenance etc, as she benefits from living in the property.
Db benefits long term by contributing nothing (other than 5k deposit) and when property sells, gets 50% of equity.
Short term db is potentially out of pocket as he thinks he could make more renting out his share.

Personally, i can see so much that could go wrong that i would be reluctant to proceed.
I prefer the idea that parents 'give' them half the amount each and they start with a smaller property.

What if op lives in the flat for 10 years, paying all the mortgage and maintenance, db has a very good deal then. Half the equity for no input, although i suppose you could argue that he has lost out on a rental income over that time.

As to the boyfriend, I don't think there is a problem there. He wants to live rent free to save up for a deposit, he should continue to do that with his parents. Silly to think he could live rent free with you, when you have a (or at least half) a mortgage to pay,

My parents can't afford to loan us money separately, they are giving us this loan for the benefit of both DBro and I together

What an unholy mess, and why aren't I surprised that both the men in the equation are the ones who will benefit the most? I can't believe you've entered into this with so little understanding of who benefits and how, OP.

And it's an abuse of the help to buy scheme imo.

If you do go ahead, you need to have every i dotted and every t crossed, then.
Do you pay the full mortgage and maintenance for 2 years? Is your db happy to not receive the potential rental income (although maybe he couldn't rent his half out anyway under the terms of the mortgage).
When the 2 years are up, are you going to pay db half the rental (£350) then he pays half the mortgage and maintenance costs? What about the fact as a pp mentioned, renting a room in a owner occupied house isn't the same a renting a complete house, they have fewer rights etc and the rental amount is less to reflect this.
Why is you db's name not on the mortgage?
Who gets what percentage of the equity when it's sold, bearing in mind your db put an extra £1000 in?
Can either one of you force the sale? What if db wants his equity out to buy a property for himself?
Lots to think about op.

This sounds like a really complex idea fraught with problems. I wouldn’t do it.

I'd tell the Boyfriend to stay at home rent free.. why the hell should you subsidise him buying his OWN place. OP you need to really think about why he agreed to come live with you, rent free.. it's a red flag.Life is not free. Let him stay at home with Mommy and Daddy.

You need to some serious close reading and lawyering about this deal.

I do at last understand the putative fairness of the arrangement with your bro. But... there are so many lose ends to tie down e.g.

1. Does your mortgage contract allow your deposit to be paid with loans?

If not, then, firstly, you need to declare the staus of the funds to your mortgage lender and see if they'll still give you the mortgage you want.

Then, if so, the people making those loans need to be named as having an interest in the property. They also need to be included in your deed of trust.

What do they want back exactly? A proportion of the property value when sold? The same amount they put in? The same amount with interest? When? What happens if the property gains / loses value by the time you sell?

2. Your brother is co-owner. How will he pay his half of the upgrading and maintenance required to keep the property habitable?

During the first two years NO-ONE can charge rent from ANYONE. Those would appear to be the legal terms of your mortgage. So you both need to keep back a bit of capital / be paying into a savings account, to cover this stuff.

Or is the expectation that, as the person living there and benefiting from everyone's generosity, you'll cover all of this, as if it was solely your home? Not madly unreasonable.

3. But then, how do things change after the first two years?

As pp have said, charging market rent without taking market risks, would be a very cushy number.

If your bro has agreed that you just carry on covering the mortgage and shouldering responsibility for all the upkeep, fine.

But, have you thought through what happens if and when either of you thinks work to improve (rather than maintain) the property is needed?

What happens if one of you wants to sell when the other doesn't?

4. Finally, presumably this is a one-bedroom flat. Is that right? So, while you are living there, it is not possible to let out any part of the flat to anyone else. You cannot charge people to share your bed (well, you can, but...).

There have been a billion threads on MN about men trying to move their GFs in and charge them for the pleasure. Unless somebody has their own bedroom they are neither a lodger nor a tenant.

5. The DP issue is all about attitude. Given the above, it might be fine for him to stay with you in your flat rent-free, as there is no legal or moral way you can charge rent for half a bed in your flat. But, is he really focused on doing the best thing for your future together, or for himself? How do you see that future playing out?

Reject your parent's money. Reject your DB's money. Get the cheapest place you can where you live alone. Save up like crazy but most of all work like crazy, in legal you should be able to earn much much more than you are.

Get yourself an independent life away from all this enmeshed piss-taking.

@TowelNumber42 yes to that.

The people saying brother is only putting in a £5k investment have they missed that he is paying back 50% of the loans?

Ok it's not how I'd go about it but reading OPs posts it seems like this is the only way she'll be able to afford to move out and she's still a lot cheaper than market rent.

What's the timescales for paying your loans back ? Have you discussed what happens if it goes into negative equity?

He doesn't want to pay rent anywhere because he doesn't want to pay towards anyone's mortgage

Fuck off, hes a Walker who'd vest off get a job and his own fucking house then. I hate this attitude 'paying someone else's mortgage' just because someone has invested in property doesn't mean he should get it for free.

Would it be ok if the person owned the property outright then???

The people saying brother is only putting un a £5k investment have they missed that he is paying 50% back of the loans?*

No not at all. He’s only paying 50% back on the loans. Hardly 50% of the loans. He’s paying sweet fa toward the mortgage and this is the big one, which must be paid and where interest may go up exponentially. He should also pay half the mortgage. He will own half the house. He’s living rent free at mummy and daddy’s house.

He’s only put 5k in therefore op should be allowed to live there for half the mortgage payments. As is, he’s expecting £200 per month on a 5k investment and not paying a bean in interest on the house loan. He will own half the house. That’s a fucking sweet deal.

@Chessterton
Op will be paying the interest on the mortgage, the capital on the mortgage and her dp paying her brother £200 toward his part of the loan from your family. Her brother will benefit from 50% of the sale. He’s haemorrhaging free money. Of course he’s screwing her over.

Jetsetterf
You haven’t answered the question of just buying a tiny place alone. Is this doable. Your plan is madness.

I do not understand why your parents cannot afford to loan you money separately.

Cannot remember the figures but if I have 20k for DC and I have two DC, that is 10k each.

If DD has 4K, that gives her 14k.

Plus whatever capital or mortgage she can raise herself which she may have to save up.

If the house is big enough to rent out a ‘half’, it must have more than one bedroom, whereas you do not need more than one bedroom in a starter flat/home, I do not think. So a cheaper smaller place for you, which you alone are responsible for.

Fucking hell OP your brother is screwing you over massively.

If he’s expecting you to pay the mortgage in it’s entirety, then an additional £350 which is ‘market rent’ that he’s missing out on, AND rent from your boyfriend....? He’s proper quids in, isn’t he? £500 or so a month plus part ownership in a property.

Your boyfriend isn’t unreasonable to be put out that rent free isn’t rent free anymore. He is unreasonable to have expected no rent to have to be paid though - this is life.

It honestly sounds like you’ve been properly walked over and brainwashed if you believe this arrangement is anything other than a massive cash cow for your brother.

The brother is not being unreasonable. As someone worked out up-thread, he should be getting £220 in rent from OP, after taking account of the fact that she's paying the whole mortgage.

He was willing to not get rent when she was going to be living alone, so in fact at that point he was going to be subsidising her by that amount.

Apparently he does want to get rent if her DP moves in - but no more than he was entitled to in the first place, OP says it would be about £200. So while it's a bit arbitrary to ask for it or not depending on who lives there, he's not asking for an unreasonable amount.

I don't think the DP is being unreasonable. He doesn't think adults in general should live rent-free, it's just that as a very young adult, he's in that situation at the moment with his parents, so it doesn't make sense for him to change. He was invited to live rent-free with his girlfriend, which from his point of view doesn't make him any better off, then had that offer pulled, which he's reasonable to be irked about.

Blimey it's all a bit of a mess.

He’s paying sweet fa toward the mortgage and this is the big one, which must be paid and where interest may go up exponentially.

The OP is a tenant in his half of the property, in return for paying his £130 share of the mortgage she is getting to live in his half of the rental property, that is worth £350 to her. She would have to pay £350-£130=£220 rent on top of paying the mortgage for him to get his fair share.

Except that it's not clear he'll be meeting any of his obligations as a landlord. It's likely she'll be shouldering those. Nor is he taking on any of the risks or costs that commercial landlords do.

It's all covered upthread.

I'm totally astonished at your "deal" as well. Not much to add there that hasn't been said already.
But regarding your DP, I totally get him.
I wouldn't be happy to move into my DPs house and then be charged rent by him. Somehow it's very different to moving in together and share the rent or a joint mortgage. On that note, since you already made plans to get married by a certain age, and this house purchase seems a recent thing, how did you not have a conversation with DP about living together prior to house hunting with DB?

You: "Darling, I think it's time I move out from my parents' home but I can't afford it by myself. I think I'll buy with my brother."

DP: "WTF? We've already discussed marriage and you know I'm saving for a house deposit, too. Shouldn't we have a look what we can afford together first?"

In any case you are stuck at the moment.
I would probably sit out the next two years, then evaluate both the housing and relationship situation.

Why on earth would your DP expect to live ANYWHERE rent free?

Sorry, but he has cocklodger written all over him.

Very strange arrangement all round.

You know that if you marry some of your share of the house will be your boyfriend's? So if he is serious about marrying you, he shouldn't mind putting money into the house... Or does he want to buy somewhere on his own, without you?

I certainly wouldn't be marrying this scrouging little git that is your 'D'P. Doesn't want to pay for anyone else's mortgage so has to live rent-free?

Fuck off.