Moving In Together - Financial Fairness

[mummytippy]

I’m looking for advice on moving in with my partner and we both want to do it fairly. We earn the same amount, have about the same amount of money and time (6 years) outstanding on our mortgages. My property is worth more than his. I have a will drawn up already where my property will be left to my only adult child should something happen to me. My partner knows this. My adult child lives with me and my partner has 3 adult children that do not live with him. I don’t know what his provision is for them if something were to happen to him (Will made etc). We have talked about his property being rented out when he moves in with me. I’m interested to know what is the fair way to move forwards as he will have a rental income that more than covers his mortgage payment and as he would be moving in to my home I obviously won’t. He also won’t have any outgoing bills either except for mobile phone and motoring and my bills will inevitably increase. Any advice on how to best to arrange things would be most welcome. TIA.

You should draw up a rental agreement where he pays you rent, which includes an amount for bills, of course.

Do you plan on marrying at some stage and do you expect your adult child to stay living at the house for long?

I'm not sure your bills will go up that much. He will use a bit more electricity, water etc but it won't be loads. He should pay his share of food costs though. He could pay a % of his rental income but that may be tricky.
Would it be easier for you to come up with a figure that you would be happy with. You should both be 'profiting' from the arrangement.
The most important thing to do is set things up so that it's easy for you both to talk about finances. Maybe you could suggest a figure for now but you could schedule in a 'meeting' in 6 months time to see how things are going.
The more you can talk about each of your expectations the better. Holidays, family presents, what happens if one of you becomes ill, etc

I wouldn't do a rental agreement I would do a cohabitation agreement.

You should also discuss what would happen if you decide to split.

@DoItBetter Is this something you have done personally? And has it worked?

My adult child will be at home for some time yet as just completing A Levels then likely to take an apprenticeship so wont be fantastically paid to start with.

We may get married, but if we do it would be a few years off I imagine.

What % of rental income do you feel would be fair? Charging him rent is not something I had thought of doing but I can see that it would be the only way for it to be fair.

I think we’d split the shopping at the time we shop. He eats more than me but then I have my child who’s dependent for at least 6 more months so 50/50 would probably be fair.

I want us to be on same page from the start.

See a solicitor.

No rent, but half the living costs, so half the bills and food and joint petrol.
You pay the mortgage and any household repairs on your home, he does the same on his.
Reassess after a year living together

That would mean he would get to pocket the rental income from renting out his house.

OP, how much do you think he could rent out his property for? There are costs to renting out so you would need to allow for that.
Maybe a third of his rent?

You need to both be able to sit down and discuss this. If you are comfortable enough to ask him to move in with you then you should feel ok to discuss this. Have a think and try and work out what you would feel happy with. Be honest with yourself then be honest with him. See what he thinks.
50/50 on food might be overly generous for you if your teen eats anything like the amounts mine did.

He would get the rent and it would cover the mortgage, but he will also need money for repairs, decorating, gas and electrical certificates and also any down periods between tenants. Being a landlord is expensive.

He could save the extra money and after a time use the surplus above an agreed amount for a holiday for them both.

@DoItBetter We looked on Rightmove and Zoopla and he could get between £1000 - £1200 pcm. There is a maintenance charge of £150 pcm as it’s an apartment. His mortgage payment is around £320 per month (fixed), so with the maintenance charge and a
monthly fee for a letting agency perhaps £500 per month in costs. The income each month from renting out his place I guess would be between £500 to £700 after these costs are paid.

So if he gets his mortgage paid, then so should you. He should ‘contribute’ the same as he gets, then split the bills.

you pay wear and tear on your place, he pays it on his.

He should pay you ‘rent’ so you are both equally off. If you rented your place and moved in with him, you’d not want to profit

I'm not sure you've accounted for his costs sufficiently - he will need to put something away out of his rental income each month to account for wear and tear on the house, appliance repair/ replacement, damage by tenants and any void periods. I know you'll technically have wear and tear on your house too, but tenants can't be expected to look after a house as carefully as owners plus also if something breaks it needs to be fixed straight away where if it was your house you might live with a dodgy appliance or whatever for longer Also as you say he works I assume he's at least a basic rate if not a higher rate tax payer so 20% at least of his profit will go in tax straight away. So I think you're looking at more like maybe £250 - £350 a month 'profit' to him from renting - myself I would probably just ask him to pay a higher proportion of the monthly bills to account for this rather than messing around with him paying you rent, or keep rent to a token £100 pcm or something? Or suggest he saves the profit in a separate account to be used for joint purposes in the future and just split all bills 50:50?

It's so tricky. If he paid 50/50 of all bills that would be a good saving for you. Electricity, gas, insurance, tv, internet. Maybe that would be enough? I don't think there is a right answer.
Then review everything in 6 months.

Have you taken into account the tax he will pay on his rental
Income?

I say split all bills 50/50 but each of you remain responsible for your own properties.

Do you think you will buy jointly in the future?

When my now husband moved in I had him pay 1/3 of the bills and 1/2 of the council tax, the bills may surprise you, our utilities didn’t increase at all when he moved in.

I don’t think you realise what little profit he will actually see from the flat once he’s paid the service charge, estate agent fees, put money away for his self assessment and put money away for a sink fund. We recently moved and rented our old flat out as we weren’t 100% sure we wanted to sell it, well over half of the rent we didn’t own due to tax, service charge and agent fees, then another 15% went straight into a sink fund for any repairs etc, then we had landlords insurance as well. About 30% of the rent remained as ours.

Be careful about payments so that he cannot make a claim on the home. If you do get married your Will needs to be redone as marriage invalidates it unless done in anticipation of marriage. Circumstances can change. What happens if any of his children want to move in down the line for whatever reason? What happens if he decides he doesn't like yours living at home?

Done this at the beginning before we got married. No rent charge as hubby was not benefitting from the actual house. Also not 50/50 on bills as I had a child so didn't expect him to pay a full half. But apart from council tax and food nothing else went up tbh. He happily set a standing order of 400 a month to me, did offer more but I was happy at 4 and then continued to maintain his flat and also paid for many nice holidays breaks away, extra goodies, the odd fuel in my car without needing to be asked. Once we got married we both sold our properties. As agreed the majority of mine went into a trust fund for child when older. We ended up getting joint accounts and ye for us everything was smooth and trouble free and the house we have now is in a will to be split by our now next 3 youngest together as oldest already benefits from my first house from my grandparents

I think you are doing all the emotional labor here. You are being set up to fail.

I think you should ask human to come up with a proposal on how this should be done, and if he can show how it is fair then great.

Another thing to consider if you are older is what happens if you die first yet he is living in the house- would he need to move out? What happens if you go into care home- he stays in house? Just some food for thought

He has his own place. However times change, a review of your Will every 5 years is standard.

Split all bills, food shop etc. What is left from his rental income could be used for holidays (after maintenance etc has been deduced).

Thank you for contributing. So are you saying that as his mortgage will be paid by the income he gets from renting out his property, mine should be paid by this too? Eg, split the rental income 50/50 after letting agency fees and maintenance charge deducted but not his mortgage? Sorry I’m a bit confused!

Thank you for all the comments. It certainly is a ‘tricky one’. One thing that is definite is I will be leaving my property to my DS (have a will) as it is my childhood home and I will not be moving from it. We may get married but I will have my will amended to protect my DS’s interests.

Both of you will be better off, but his asset is being rented, yours is benefiting you both by giving you a joint home.

He will get rent and must pay tax, management fees and no doubt his mortgage. If your mortgage is also then paid using the balance of this money, that to me seems fair. That is an ‘evens’ situation. If you wanted to say his house is worth less, therefore you prorate the payment, fair enough. You would top up your mortgage.

He no longer has bills so he shares yours.

Seems that you are then pooling resources. If you pay 2/3rds of food, that would reflect your child’s costs. You may make a small further concession, but apart from water I’m not sure your child will change bills that much.

If he wants to keep all his rent, well then he should pay you rent! Seems to me that working with the additional income that has appeared due to your union under one roof, to benefit you both, is only right.

I wouldn’t ask him to pay rent.

As others have said he may not be left with much from the rent after repairs, insurance etc is all paid. And even though the rent will cover his mortgage he is leaving himself vulnerable in the relationship.

If you break up you don’t need to move and can stay as is, he will need to move but where to - no guarantees the tenants will be moving anywhere quickly.

Go 50/50 on bills and you’ll probably find yourself better off than before he moves in unless he has the heating on max 24/7 and takes 3 baths a day.