Is this fair? It's a money one

[Oldladyshoes]

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?

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.

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.

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?

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.

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…

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.

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.

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.

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.

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 -

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

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

What if anything does A bring to this relationship??

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.

Good lord but B is some mug, and has been taken for one completely.
What must B's children think of such foolishness.

B has been rightly used and should run for the hills.
There is no excuse for such nativity.

I think B should terminate the agreement.

Then start again with proper legal advice.

No, I don't think it's fair but this is on B not doing what they were advised to do.

I think it's even. B saves £500 per month plus reduced living expenses as their mortgage is covered by rent.
A gains £500 per month plus reduced living expenses. Both are £500 better off than living apart.
Unless B was expected to pay for repairs on As house of course.

I think this sounds fair in this scenario provided that both were responsible for maintenance of their own properties and essentially that is what the rental profit went to.

But B isn't just a lodger. B is sharing the home with A. B has access to all shared areas and a say in for example 'what shall we watch tonight'.

This arrangement is allowing B to have tenants who pay B's mortgage, so B doesn't have to. B is significantly better off every month due to this rental income.

Would B seriously expect to significantly benefit, while A doesn't?

B should have been putting some of the rental profit aside for maintenance, voids etc.

I am a landlord. B has acted very rashly and will now be seriously out of pocket. He / she should serve a section 21 immediately as the law is about to change and get the house back.

So not only does B dislike being a landlord, but they have spent their savings on doing up their house and don't want to do that again with A's next house?

I think B should move into their own small rental while they think it through. Rental properties have costs, and B needs the rental income to cover those costs or they are losing money.

But it sounds pretty clear that they do not want to have to renovate A's new house, and fair enough. Time to leave, I think.

A is taking advantage of B and B needs to LEAVE now before anymore things happen

Who's paying tax on the rental income?

Maybe I'm missing something but I don't understand the responses that suggest a 50/50 split of the profit would have been fairer. There's nothing to suggest that the two have agreed to combine finances so A doesn't automatically deserve anything in my view.

If I was B, assuming finances were being kept separate, I would have been happy to move in, split bills 50/50, and contribute to general wear and tear type repairs.

I see some suggest that B could be paying some rent for living there but, I wouldn't charge someone rent on a property I own outright. I already benefit from from a 50% reduction in bills.

There is the arrangement should give both equal income but I don't think that's the right approach unless they agree to combine assets including property.

It sounds like A sees B as a meal ticket and it sounds even more like that when reading the OP's updates.