How to be fair within a couple if only one of them owns the property

[DoggerelBank]

DD is EXTREMELY lucky and has an inheritance that makes it possible to buy a flat earlier than most people of her age group. She has just had an offer accepted. There's a mortgage, but it's about 75% paid with the inheritance. Her boyfriend will be living with her but will not (at least initially) own any of the flat. They have been together for 3 years and seem quite settled, but not ready for a life-long commitment at this stage - anything might happen as they're still early 20s and just starting out in the big wide world. So ... how should they arrange finances? Aim is:

1. it isn't too messy if they split up
2. boyfriend contributes his fair share
3. boyfriend is not just treated as a lodger - he's more than that and if he helps support with sorting out decoration, hiring plumbers, making it a lovely home, etc etc for years and then they split, it would seem unfair if he was left with nothing to show for it.
4. boyfriend benefits in some way if she/they decide to rent out a room to an actual lodger, or for AirBNB, etc., so they both have a financial incentive to do this if they choose to, e.g. if interest rates go up.

They'll be earning similar amounts, I believe. We're thinking of something along the lines of him paying what would be the going rate for a rental, with a legal agreement that if they split, they add up everything she's put in, initially and through mortgage contributions, and what he has paid her, and work out the proportion that is his contribution, and give him the correct proportion of the value of the flat at the time they split. That could get messy if she can't afford to pay him out, but is there any other way that would be fair to both? I'm struggling to see how best to protect them both from feeling taken advantage of in future.

Anyone got any words of wisdom?

She should pay her mortgage and they should split the household costs half way. He can then build his own savings and she will keep her asset.
If they get married/get serious he can invest his savings in the house. If they split up he will have a nest egg and she keeps her asset.
If the mortgage is 25% she will still be paying much less than most people and will also be able to save.

She could ringfence the first 75% and then split the next 25% 50/50. So he would own half of the mortgaged share.

If they split the mortgage is settled and they get half of the equity of that share each?

Thanks! You two are much better at explaining a plan clearly. Both of your suggestions sound good. Will ponder ...

In this case:

She pays for anything structural / integral to the fabric of the building
They pay jointly for anything cosmetic
He pays her a small rent for living there
They split all utilities 50/50
He saves separately for a property or whatever he wants

At this stage I would encourage her to maintain this as ‘her’ property.

I think that allowing him to live in her house rent-free would be more than generous enough.
They’re not married.

They don’t have children.

I would look at the costs of splitting all bills except mortgage. She pays mortgage. All those plumbing and decorating bits you mention. Does not need his “permission” to get a lodger / AirBnB (but is open now that it might happen) and doesn’t give him any money from it.

That probably leaves her worse off than him if they have a similar income (dependant what the 25% mortgage is in absolute terms). But that’s fine - it’s right she should pay more, for her asset.

He can save what he would have paid on rent to give himself security. And on a practical side, that might even up their disposable income.

It’s her asset, and she doesn’t owe him any kind of share in it.

We're thinking of something along the lines of him paying what would be the going rate for a rental, with a legal agreement that if they split, they add up everything she's put in, initially and through mortgage contributions, and what he has paid her, and work out the proportion that is his contribution, and give him the correct proportion of the value of the flat at the time they split

This is really poor advice.

What if they split, it’s determined that he “owns” 10% but property prices have increased and your daughter can’t afford to give him that- she could be facing a remortgage or selling the property.

I think you need to advise her to look out 100% for herself here and do everything she can to protect her ownership.

The boyfriend will benefit from having a nice home with more security that if he was renting from a landlord.

He should contribute to bills but not to any capital assets- the mortgage, new windows etc.

A fair idea might be for them to agree that he saves the equivalence amount that he would spend on rent each month.

If they split, he walks away with his savings having been able to build them by virtue of the fact that he wasn’t paying rent.

If they stay together, it can be used as part of the deposit should they want to buy another property at some stage. That way, they’ll have more equal stakes in terms of deposits.

Honestly, creating a situation where your daughter ends up selling her home to pay off an ex-boyfriend who lived there but didn’t own the property is just insane.

Lol, @VodselForDinner, that told me! I knew I could trust Mumsnet to come up with something sensible. It sounds as though the consensus is she should have all the costs and benefits of owning, he saves instead of paying rent, and they split bills. That sounds fairly straightforward and easy for everyone to get their heads around. Thanks, all.

I agree with @VodselForDinner. Presumably they are not ready to commit to marriage and financial involvement, but they have financial interreliance by the back door instead. Your daughter will be relying on not splitting up with him, otherwise she will have to buy him out or lose her home. If he wants to invest in property he should use his savings and mortgage for a separate investment that is within his affordability, not relying on her. It might be not be romantic or trusting to explain overall, but it's practical. You are right to set the situation up properly now, and you do it , rather than DD. So much could change in the next few years for them both.

@DoggerelBank

Lol, *@VodselForDinner*, that told me! I knew I could trust Mumsnet to come up with something sensible. It sounds as though the consensus is she should have all the costs and benefits of owning, he saves instead of paying rent, and they split bills. That sounds fairly straightforward and easy for everyone to get their heads around. Thanks, all.

That's what my DD did with her ex, who owned the flat they shared. Though I think she paid more than half of the bills (he was away Mon-Fri). Sadly they did split up, but because she'd been able to save, she wasn't as much in the lurch as she'd otherwise have been.

Now it's the other way round. She has her own home (though heavily mortgaged) and her established partner lives with her. I haven't pried into their arrangements, but she had given the impression that they have a similar arrangement at this point.

Lol, @VodselForDinner, that told me!

Sorry, didn’t mean to sound chiding. I just get really passionate about women being protected when it comes to assets and financial arrangements

I own my house, boyfriend lives with me. I pay mortgage myself, he pays half of the utilities and food bill.

If he would like to put away the money that he is saving on rent he is welcome to, but at the minute he is paying off some debts with it.

I only let him contribute to house items that he could take with him if he left, or that I could readily come up with the money to reimburse him for I.e. smart home bits - ring doorbell, nest thermostat, etc.

I would be wary about encouraging marriage. If they do, and then separate, he definitely will have a claim on the property.

"We"
there is no we - it is her- what does she want to do?
(said as someone who had a partner move in 45 years ago and who's daughter has just been in the same situation)

She should be taken a small amount of rent from him to cover the mortgage. If he had a landlord, he'd be paying rent to cover their mortgage. Why should she be the one who has to pay out and have less disposable income and he gets to live rent free? I understand he won't have any ownership of the mortgage, but I think I'd be looking at a 25/75 contribution to the mortgage payment.

@TokenGinger

Consistent contributions towards the mortgage are what would give him a stake in the property should he want to pursue it legally, which is what the OP and her daughter want to avoid happening.

Been together 3 years and not sure about life long commitment.....

Tbh, at this point they should know or make a commitment.

But this aside, why dont they continue to rent together and split all costs, but in the meantime she can use the deposit to purchase a buy to let which she rents out, and if/when they ever decide to marry, they can move into the buy to let.

All benefits of owning should stay with her! They’re young and he’d otherwise be renting!

She has all ownership (and also all responsibity for maintenance). He should pay a fair market rent but if she wants to she could discount that. All bills for utilities etc split equally

If they split up he’s in no worse a position than he would have been otherwise. If they stay together then eventually it will become a shared asset and he benefits then.

It’s
Crazy to think that he should somehow have to benefit at this stage

Why should they have to make a commitment? That’s entirely their business and nobody else’s. She would be ill advised to marry as then half her property would become his and he could push off and force her out of her home.

@FFSFFSFFS

All benefits of owning should stay with her! They’re young and he’d otherwise be renting!

She has all ownership (and also all responsibity for maintenance). He should pay a fair market rent but if she wants to she could discount that. All bills for utilities etc split equally

If they split up he’s in no worse a position than he would have been otherwise. If they stay together then eventually it will become a shared asset and he benefits then.

It’s
Crazy to think that he should somehow have to benefit at this stage

Hmmm, i dont think thats always the case.

I married my partner after 1 year of 1st meeting, when I was 25. And I owned a 1 bed flat at the time.

After marriage, we both contributed what we could to the bills and future savings (deposit for next property). It wasnt a business transaction where he had to put £xxx and I had to put £xxx. I think thats the wrong mentality/approach for serious relationships.

Your only concern should be protecting your daughter's assets. Why you're even thinking of her boyfriend's best interests when it comes to her property is beyond me. It's not his, he deserves nothing, and your daughter should have this fact sorted with the help of documents drawn up by a solicitor.

But the OP has said they’re early twenties and don’t yet know what the future holds, understandably. I probably thought I wanted to marry the boyfriend I had in my early twenties, but now, as a 36 year old woman, I’m very, very glad that I didn’t. Gone are the days of marrying the first person you date and ending up lumbered with them for better or worse.

To be making these considerations and asking the questions is smart and modern, women historically haven’t always protected themselves financially, or weren’t even encouraged to have their own assets.

Your thinking @JennyDune seems rather old fashioned.

@ZealAndArdour

But the OP has said they’re early twenties and don’t yet know what the future holds, understandably. I probably thought I wanted to marry the boyfriend I had in my early twenties, but now, as a 36 year old woman, I’m very, very glad that I didn’t. Gone are the days of marrying the first person you date and ending up lumbered with them for better or worse.

To be making these considerations and asking the questions is smart and modern, women historically haven’t always protected themselves financially, or weren’t even encouraged to have their own assets.

Your thinking @JennyDune seems rather old fashioned.

To provide some context - im a (church going) Christian

I’d suggest it stays her flat and that she is responsible for maintenance but they split bills equally. He should pay a fair but modest rent. If it’s two bedroom I’d suggest he has a bedroom that he has a space of his own but that the rest of the flat is 100% your daughters. Depending on what they end up doing I’d suggest they get a cohabitation agreement.

They should set a date when they review how things are working out.

They should also sit down a d really talk everything through. Is there only one parking space/how much are they going to spend on tv packages or broadband/etc etc etc

DD makes it clear that she owns the property 100% & pays the mortgage

He pays towards bills only

He can save up for his own future, either together or separately in the future

[quote ZealAndArdour]@TokenGinger

Consistent contributions towards the mortgage are what would give him a stake in the property should he want to pursue it legally, which is what the OP and her daughter want to avoid happening.[/quote]
So does the same apply when you rent a house?

Surely a token contribution should be given towards the cost of rent? Why should he get to live rent free? I'm pretty certain if he was only paying saying £150 a month in rent, if he tried to take that to court to make a claim, they'd see that that is just a rental contribution.