Co-owned Property - What to do?

Szero · 17-11-2018 8:18pm #1

I co-own a property with a mate (I know ... boom time decision).

The 3 bed property is worth about 550k. The mortgage is down to about 290k. It is in an area of very high rental demand. 3 beds frequently rent for 4k per month.

I am in some respects in a lucky position, just unfortunate in some respects to own with a mate.

My mate has moved elsewhere about 5 years ago. I have been renting out the other 2 rooms and agreed a rental split calculation with my mate.

I now have a girlfriend, things are going well, and we are talking about moving in together. She understandably does not want to live with flatmates. We both accept that we should leave buying a place together for at least another year.

My options seem to be:
(1) Sell my 50% stake to my mate (if he will buy and if he can afford) and rent elsewhere.
(2) Buy his 50% stake if he will sell (don't think he will sell, he sees the place as a pension).
(3) Force a sale of the whole place.
(4) Rent out the whole place (about 6k of capital expenditure would be needed in the place before this, also lots of hassle but I am really good at managing that kind of thing).
(5) Rent 2 of the 3 bedrooms and leave my room empty most of the time (I guess I can still claim rent a room relief) and rent elsewhere.
(6) Somehow persuade my mate that I am kicking the tenants out and get my girlfriend to move in. (rent split implications etc)

Not sure what to do. Any thoughts would be appreciated.

Victor · 17-11-2018 8:25pm

Charge girlfriend €4k rent ...

More seriously, you need to add up what each option will cost you and decide what thatose situations are worth to you. If you get somewhere else with your girlfriend, presumably that is going to cost you a lot of money also.

Szero · 18-11-2018 12:55pm

Thanks Victor. I have costed the options and renting the whole place seems to make the most sense from a cost perspective.

Just wanted any opinions as to what is the best to do in these type of situations.

Cheers.

3DataModem · 18-11-2018 1:01pm

Option 6 not really a runner as effectively your mate is subsidising you + GF lifestyle.

However it's also tough to rent with GF knowing you have a nice place yourself you can potentially get at some sort of discount on the market.

A 7th option:
Perhaps if you + GF move in and use two rooms (one for bedroom, one for spare room) then rent the 3rd room to a lodger it'll feel more like "your place" but you can still probably satisfy your mate by giving him effectively 100% of the rental income (very tax efficient too).

If that's not a runner I'd just move in to a new place with GF and rent out whole place (option 4).

18-11-2018 1:07pm

I'm intrigued by what you mean by "force a sale"...... Is that even possible?

Szero · 18-11-2018 2:12pm

Thanks guys.

A lodger is not an option. GF will not live with flatmates.

By forcing a sale, I mean forcing a sale of the whole place, and yes as a co-owner of the place, I have the right to do that if I wish.

Cheers.

19-11-2018 3:55pm

I don't think you do have the right. If there are two owners and one wants to sell but the other does not, as far as I'm aware you cannot force the other party to sell up.

Open to correction though.

Ginger83 · 19-11-2018 4:00pm

Szero wrote: »

Thanks guys.

A lodger is not an option. GF will not live with flatmates.

By forcing a sale, I mean forcing a sale of the whole place, and yes as a co-owner of the place, I have the right to do that if I wish.

Cheers.

You may have to move as i don't believe you can force a sale.

19-11-2018 4:10pm

Is your friend making any contribution to the management of the property, finding and vetting tenants etc.

If you were to move out would they do that or expect you to continue doing it.

Practically they consider it a pension investment - so far it has been an easy one as you have been there dealing with it - would it be the same if they were getting calls from tenants etc

Could you get a mortgage for a property on your own or eventually with your new girlfriend, if you still have this property/mortgage?

Alkers · 19-11-2018 5:00pm

I would go with option 5 for the time being, move in with your gf and see how you get on.
If you decide to buy with your gf, I'd then look at my options again.

Claw Hammer · 19-11-2018 6:39pm

Ginger83 wrote: »

You may have to move as i don't believe you can force a sale.

He can certainly force a sale. It used to be called a partition suit.

C3PO · 19-11-2018 6:59pm

Deleted User wrote: »

I don't think you do have the right. If there are two owners and one wants to sell but the other does not, as far as I'm aware you cannot force the other party to sell up.

Open to correction though.

The OP can indeed apply to the court for an order that the house should be sold - however this is a very expensive option and best avoided if at all possible!

Eric Cartman · 19-11-2018 7:15pm

if your missus wants the others out, let her buy your mates half.

wildwillow · 19-11-2018 7:20pm

Option 5 will not allow you claim rent a room scheme, as you will not be living there, and it won't be your private residence.

The_Conductor · 19-11-2018 7:47pm

If you have 250k of equity in the property- either you or your mate will have to find at least half this amount + another 10k for legal fees etc- to buy the other person out.

How/why do you imagine that it makes sense to move your girlfriend into the property- it sounds like a recipe for her having some sort of a call on the property- if the relationship ever went south.

Of all the options you've laid out- the option least likely to destroy your relationship with either your girlfriend- or your mate- is to sell the property on the open market and split any equity you realise on the sale.

I would strongly advise against renting it out- the current regulatory and taxation environments are onerous- and open to abuse by tenants. Its not worth it- I'd strongly advise not to go down that road.

Also- the rent you're suggesting- 4k for a 3 bed- and you're suggesting your place would need to be done up- just doesn't ring true. Expensive as rents are- and they are expensive- you're looking at something really really special to achieve a 4k/month rent roll- and the fact that you're saying yours needs work anyway- would suggest your property is not part of that select cachet.

caviardreams · 19-11-2018 8:02pm

The_Conductor wrote: »

Also- the rent you're suggesting- 4k for a 3 bed- and you're suggesting your place would need to be done up- just doesn't ring true. Expensive as rents are- and they are expensive- you're looking at something really really special to achieve a 4k/month rent roll- and the fact that you're saying yours needs work anyway- would suggest your property is not part of that select cachet.

Would second this - 4k for a 3 bed sounds like immaculate condition properties in the likes of ballsbridge etc, which would sell for way more than 550k so either your property valuation is too low, or your rent is overstated. A yield of nearly 9% is very difficult to get in today's market especially for a 3 bed house imo. I would estimate the rent is probably closer to 3k per month if you take a realistic view.

Victor · 19-11-2018 10:20pm

The_Conductor wrote: »

and you're suggesting your place would need to be done up-

€6,000 could easily disappear redecorating a bathroom, never mind an entire house.

ted1 · 20-11-2018 11:23am

Where do 3 beds rent for 4K?

fletch · 20-11-2018 12:28pm

ted1 wrote: »

Where do 3 beds rent for 4K?

Not many on daft and certainly none that would only fetch €550k

MissShihTzu · 22-11-2018 8:03pm

As far as I can see, you have only 2 options.

1. Persuade your friend to sell altogether and have a clean break.
2. Either he or you buy the other out.

The others sound too messy for words and possibly have tax implications.

Co-owned Property - What to do?

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