Buying a house with partner as tenants in common

[123NorthWest]

Wondered if anyone could give advice.
My partner and I (not married) are buying a house together. I’m providing a large deposit. Say about 60% of the purchase price. We are then having a mortgage for the other 40% which will be a joint responsibility but realistically he will pay most of because we have 3 children so my earning potential has dropped and I’ve left my city career.
If we buy the house I want to be tenants in common and each own a set percentage.
However say I owned 80% (my 60% deposit then half the mortgage) if we split what I would get back would be very different depending on if the mortgage was paid off or not!
Please can I ask what others have done in this situation?
Also if we are tenants in common do we have to have a trust deed saying who pays how much on the mortgage? I’d rather not have this as our income varies and one of us may not work at all times due to childcare so we need to be flexible regarding who pays what.
I know some may say everything should be 50/50 but I want to protect my assets for my children. If he left and took half he could have another family and my children wouldn’t get the money in the long run. I wouldn’t plan to have any more children either with him or in a new relationship.
Thanks all for any advice and experiences

If you were married would you feel differently about it? Is there a particular reason you are not married?

I agree your career sacrifice for child rearing means your reduced ability to pay a mortgage should not negatively impact you. Your maths looks broadly correct, but it’s a harsh situation for him to only have a 20% stake in the property. Does he not have any savings to contribute to thr deposit? A 2:1 ratio would be more palatable than a 4:1 ratio.

You need a trust deed to stipulate your shares and what you expect to on sale but you won’t need to include the percentages paid into the mortgage etc. Some people do this. Others don’t. You can’t buy tenants in common in unequal shares without a trust deed. It’s vitally important to set out what your respective shares are.

Please make sure you keep a copy of any trust deed.

Why not ringfence the deposit and then agree a percentage split of the remainder should you split? If he's paying all of the mortgage then it makes sense that over time he acrues more of the remaining portion so that eventually you own the property 60/40.

I also think the deposit should be ring-fenced and then you jointly own the remainder. If your DH will be paying all the mortgage for the foreseeable then feels a bit unfair he only owns 20%. I’d see a solicitor for best advice on how to handle this. How does your partner feel about a 20% share.

The bigger question is around your financial security in general. While I am not someone to push marriage if both parties are working, you aren't. If you separate, all you will get is your part of the house and nothing for the missed pension contributions, national insurance payments or career hit that a long time out of work causes.

If you own 60% as TIC, then that is 60% of the equity at the time you sell. So if the mortgage has been paid off, it’s 60% of the whole sale price. Actually, if he’s paying the mortgage solely, this arrangement is more beneficial to you than him.

I think it’s very difficult to arrange ownership as TIC when you are trying to factor in future responsibility for paying the mortgage. Who the hell knows how life may change in 5 or 10 years? Your dp could become disabled and unable to work, meaning you are left paying 100% of the mortgage. Dh and I are joint tenants, so slightly different, but I’m currently unable to work due to ill health and have been off work for a year. We are 50/50, but he’s currently paying all of the mortgage.

If it was me, I’d want my deposit ring fenced and then split the remainder 50/50. That accounts for you both owning the house equally once the deposit funds have been removed. Keep in mind that your deposit is also contributing to equity. So even if your partner pays 75% of the mortgage, your deposit would have increased in value if you’d had it invested somewhere else during that time, so it’s not as simple as putting £50k in now and getting £50k back in 10 years time. So I would expect something more like a 70/30 or 80/20 split.

Lastly, don’t forget that TIC means each of your shares in the house will need to be explicitly willed to the other. You are not NoK if you are not married. So upon his death, your dp’s share would be split between your children (I assume they are his) or he could leave it to his mum or his sister or his best mate. It would make everything better for everyone and prevent you being forced to sell up, if that share comes to you and vice versa. Make sure you don’t forget to sort your wills to reflect that right away.

Why don’t you split as you suggest for now, then review how much mortgage has been paid off, and how much the house has increased in value, every five years and adjust accordingly?

Thanks all. The 60% deposit I have is quite large hence wanting to protect that. It is a very expensive house due to a fortunate situation meaning I can afford the 60% deposit. Therefore even if my partner owned 20% it would still be a very good amount once the mortgage paid off.
We may marry in the future but at present I think I would actually be more financially at risk if we married as I have all the equity.
Whilst my partner will pay most of the mortgage for the remaining 40% the only reason is because he is working and I have given up my career for our family which is facilitating his career. If I was working we would split the mortgage payments 50/50 which makes me feel like we should still own the mortgaged part 50/50 as I’m doing the childcare which I see as my financial contribution. Know it’s a controversial topic.

If we started as tenants in common on an 80/20 split say we changed that in the future to 70/30 are there any stamp duty implications?

Also - say one of us dies and leaves our part of the ownership to the other in wills, what happens if the surviving owner then sells. Would they have to pay any capital gains tax on the percentage that originally belonged to the other.

Appreciate all opinions thank you

Can you not just get a contract that says you get 60% if you sell and he gets 40%, but with the mortgage in his name. Then he would have to pay that off first and pocket any equity left over. If you want the 40% to be joint, and he agrees, then the same 60% to you stands. But then the 40% is split after mortgage paid off.

None of us can judge the financial benefits to him of you providing childcare, so it is him you would need to convince there. It does feel a bit like wanting to have your cake and eat it though.

I’m in a similar situation but with children that are mine and not his, so I want to protect the deposit for them. I think it will work something like this - percentages simplified for illustration:

50% deposit (me) 50 % mortgage (both)
deed of trust to say on sale, deposit returns to me plus 50%of any increase in value. Mortgage repaid, any remainder split 50:50

not sure where costs of sale are factored in but hopefully solicitors will take care of that!

So while the tenancy is common is about 75:25 the sale proceeds would not be split 75:25 because that would give him a chunk of the deposit. But the deed of trust would account for that.

Thank you so much.
This seems like what would suit us the best and will then reflect our contributions. I’m trying to work out how that would be calculated though- are you able to explain at all? Doesn’t the mortgage have to be paid back first?

Yes, so I suppose it would be just done like that, with mortgage being repaid first. say for example house cost 500k and 250k was your deposit and 250k was the mortgage. Then when you sell it say it’s worth 550k and there’s 200k left on mortgage.
200k is paid back, leaving 350k.
Property value has increased by 10% so you get back 250k + 10% of 250k, so 275k. Remaining 75k split 50:50.

Definitely get proper advice though!

I know this post is a bit old but I wondered if I could check I've understood @SockPuppet's advice. I'm buying a house with my husband and all the deposit (approx 22% of property value) is coming from me, again a large deposit. Mortgage repayments and bills etc will be split more or less 50:50.

I am thinking tenancy in common deed should say, if we split in future and sold:

Deposit amount comes back to me
22% of any increase in value of the property comes to me
Mortgage is paid off
Remainder is split 50:50

Is this what you were saying?

You don't want tenants in common with a fixed share because of the reasons you've set out. You want a deed of trust that ringfences your deposit plus the equity increase attributable to that, then you each gain additional equity proportional to contributions to the mortgage. You should probably also include the equity impact of significant renovation/improvement expenditure, but make that subject to written agreement between you so he can't just do works to the house to claim more equity. It's called a deed of trust with floating shares, get a solicitor to explain and draw one up for you.

If you’re married then split up, it doesn’t matter how the house is owned. It will be treated as a joint asset in any financial settlement. It would matter if one of you died as the tenant in common arrangement means that the deceased share of the house won’t automatically pass to the other person, it would come under the terms of the will.

ring fence the deposit.

if you split up and sell and the house increases by 10% you get your deposit back, rest is 50/50.

if house is worth 10% less you would lose 10% of your deposit and neither would get any extra equity.

If you get married, equity is split 50/50, including your deposit. Marriage trumps deeds of trusts etc. only way around this would be to buy it in a spouses name etc.

Generally speaking, who contributes what towards the mortgage makes little difference to the equity share.

however, if he can prove he has enhanced the value by repair work, improvements etc then that would be taken into consideration.