Legal position regarding rental income

Hi there

I hope I am posting in the correct area!


I'm looking for some legal advice regarding rental income which was received but not declared.

I own a property with my ex partner. Neither of us live in the property and I took over handling all the mortgage issues for a number of years. There was a period of time during which I was receiving a rental income for the property , but not paying it into the mortgage. My ex partner is unaware that it wasn't paid in as they haven't taken much interest in the property and left the organizing of tenants and payments to me.
As the mortgage is deeply in arrears and I was unable to handle the stress of the mistake I made, I had a one to one meeting with the lender and submitted my financial statement and came clean about what I had done. The bank understand why I didn't pay in the rental income as when they looked at my statement they saw I am heavily in debt with personal loans aswell and have said they cannot propose any payment arrangement as the affordability is not there despite the rental income.
My options are repossession of the house which is in negative equity or insolvency.
My ex partner has no wish to keep the house either and would rather be rid of it.
More so than my debtors , what is worrying me now and stressing me is the guilt of using the rental income to stay afloat rather than paying it into the mortgage as my ex thought. It's worth noting that my ex is aware the mortgage is in arrears and in trouble as the rental income wouldn't have covered the repayment amounts even if it was paid in.
My main question is, other than me being ashamed and guilt ridden , when I do present these facts to my ex, what can be done to me legally by him ?

I hope you can help me without too much judgment, I accept what I did was so wrong, and if I could change it I would. I'm certainly paying for it now with the sleepless nights and constant feeling of illness.

You need to stand back a little from this issue. Firstly, the property is in negative equity with (as I gather) a considerable level of arrears in repayments. You are a joint owner of the property and while your co-owner may have assumed that all RI was being paid to the Bank, it would be difficult to make any legal case against you for a failure to pay this money over. In any event you appear to have significant financial problems, so taking any proceedings against you would be a pointless exercise. In the context of your financial position (assumed poor from your posting) this is a minor issue and while the co-owner may be dissatisfied with your action, there is little point in taking any legal action against you.

Stress is now a big concern for you and you need to commence some action now to deal with your problems rather than continuing to worry about them. Ideally you should approach MABS or a debt advisor to help you get over these hurdles.

Kitty1;

Yes you did wrong.
Yes you should have paid rent towards mortgage.
Yes you should have kept your ex updated.

Remember this is only money, you did not kill anyone!

The Bank appear to have been sensibly pragmatic in that on viewing your finances you are apparently insolvent and they have not made a song & dance over the Rent.

Your ex will probably be mad as hell , but if what you say rent never covers mortgage , he too has to face what you both as joint owners now do.
He may have left you to manage this but since both own = both are responsible.

You/him have to sit down and discuss your options here.
He cannot walk away from it.

You both need good insolvency type advice on this one.



You are far from the first to be in this type of situation.
You have faced one demon in admitting to Bank ,
Now face ex and take it from there with an open mind.

Stay open from now on !

Good luck.

Thank you so much for your responses.

I have let the stress of it totally consume my life and my thoughts and I have basically just been living in fear and made myself ill over it.

When I came clean to the bank I offered to pay them the full rental income going forward ; simply because I want this stress and guilt taken away, to give me some peace however brief. But, they have refused, the arrears manager explaining to me nicely that based on my figures , as I am in so much debt overall , they can see that I'm in need of the rental income and therefore there is no affordability and so they cannot propose or agree to a repayment plan.

He explained to me what can happen now - a repossession of the house but there could be approx 150k shortfall - which couldn't be repaid and so there may be a court order against me which wouldn't be ideal.

So in an usual approach he has suggested I seek immediate help from a PIP.
His opinion is that if I do not do this my health will suffer badly , and he also pointed out that even if the mortgage were deleted in the morning I would still have a problem with my other debt which is why he's making this suggestion.

I have contacted 2 different PIPs so far who are to get back to me....and I realise this is slightly off topic on this thread but can anyone tell me if a PIP has to be paid a lot up front , as I wouldn't be in a position to come up with a lot.

Kitty1 said:

I have let the stress of it totally consume my life and my thoughts and I have basically just been living in fear and made myself ill over it.

Click to expand...

Well this is not a good situation to be in. Sounds to me like you need to go bankrupt and put this sorry mess behind you.

What I do not know is the legal situation for your partner in relation to tax on rental income. If you were not paying off the mortgage than you are not allowed deduct mortgage interest, leaving a potential liability to tax on nearly all the rental income. If you go bankrupt I wonder would the liability fall on your ex partner. He and you need some specialist advise.

A Pip costs around 5K I believe. But when you speak to one you can ask how to pay it and what the fees are.

Can you tell us which bank it is?. IMHO has a deal with some banks whereby they will act for you with no fee.

Is it possible to send private messages on this board Bronte?