unequal/unfair distribution of mortage/rent

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jakfrost

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About 8/9 years ago my girlfirend's parents bought an apartment as a future investment for their children.

They purchased it in my girlfriends name, thus using her first time buyers grant.

As compensation for this my girlfriend is entitled to 1/3 the value of the property with her three siblings splitting 2/3 between them.

Up until now the property was rented out to 'a.n. other' with the rent paying the mortgage, but in the coming weeks myself and herself are due to move in.

We will be paying 100% of the mortgage, with the other siblings contributing zero. However, her % share in the property won't increase.

Now this strikes me as a bad deal! I'm not particularly savvy in these matters but surely in the simplest of terms if her share of the property is 1/3 then we should pay ~1/3 of the mortgage?

Please advise.
 
So your girlfriend is getting 1/3 of a house for free. (Well, 3 grand anyway, the value of the FTB grant back then I think)

It is an investment property.

Why should you guys be treated any differently than "a.n. other" since you are not bringing anything to the table than "a.n. other" would bring, yet feel like you should be somehow compensated for this?

What is in it for the other beneficiaries by having you guys there?

Do you really expect to rent a house for 1/3 of the market rate, and have the others subsidize you?

Are you mad?

PS: In case i understand it wrong, are you two the only ones living in said property?
 
jakfrost said:
Now this strikes me as a bad deal! I'm not particularly savvy in these matters but surely in the simplest of terms if her share of the property is 1/3 then we should pay ~1/3 of the mortgage?

Please advise.
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Your paying the full rent, assuming you and your girlfriend are the only occupants, is correct - you need to view this as 2 completely seperate transactions / items.

You're not paying the mortgage - you're paying rent to the owners, simple as that. What the owners (regardless of who they are) do with the rent (burn it, pay mortgage etc) is irrelevant.
 
To the OP - yes and no.

If for arguments sake the property was lying there empty with no one renting it ,then you would be correct.

However it is not like you are getting nothing in return for yor money.
You are getting a roof over your head after all.

You could look on it as whereby you are effectively renting it.

As in - if your theory was correct then it would be far more in the siblings interest to rent it to a stranger instead whereby they would not be out of pocket at all every month.
With your suggestion they will be out of pocket each month.

Which doesn't really make sense for the siblings.
 
I may be wrong here but I was under the impression that a FTB grant was only applicable to owner-occs and not investment properties - is that right?
 
jakfrost said:
About 8/9 years ago my girlfirend's parents bought an apartment as a future investment for their children. They purchased it in my girlfriends name, thus using her first time buyers grant.As compensation for this my girlfriend is entitled to 1/3 the value of the property with her three siblings splitting 2/3 between them.
Up until now the property was rented out to 'a.n. other' with the rent paying the mortgage, but in the coming weeks myself and herself are due to move in.We will be paying 100% of the mortgage, with the other siblings contributing zero.However, her % share in the property won't increase.

Now this strikes me as a bad deal! I'm not particularly savvy in these matters but surely in the simplest of terms if her share of the property is 1/3 then we should pay ~1/3 of the mortgage?

Please advise.
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I would keep quiet as she is already doing very well out of this arrangement.
 
Thanks for the replies; i thought it better ask the question prior to commiting to the arrangement.

To put it this way, we are likely to live there for the next five years.Given that the rent is €1000/month that equates to €60000. During this time the 3 other siblings will have contributed €0. But at the end of this time her share will stay the same as will theirs.

So in essence it's not a good deal for us and that money would be far better invested in our own property.
 
jakfrost said:
Thanks for the replies; i thought it better ask the question prior to commiting to the arrangement.

To put it this way, we are likely to live there for the next five years.Given that the rent is €1000/month that equates to €60000. During this time the 3 other siblings will have contributed €0. But at the end of this time her share will stay the same as will theirs.

So in essence it's not a good deal for us and that money would be far better invested in our own property.
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What you seem to be missing is the fact that you are getting a roof over your head for that period of time.
Basically you are tenants in the property.
It's not like you are getting nothing back for your money.

Alternatively you could rent it out to strangers and rent someplace else yourself for 1000 a month.
But what's the point?
You'd still be outof pocket by 1000 a month and woudl have strangers in your own property that may not respect it like you would or else they coudl be leaving every few montsh resulting in the headache of getting new tenants in.

In a nutshell - you must look on yourself as tenants - not owner occupiers - because that is in effect what you would be.

I'd think long and hard if i was you before bringing this one up with family as your logic is definitely flawed.

Now - as to whether you want to buy another property yourselves to live in well that's a different argument altogether.
That should come under the general debate of rent vs buy.
The fact that you woudl be renting your own house would be irelevant.
 
jakfrost said:
Thanks for the replies; i thought it better ask the question prior to commiting to the arrangement.

To put it this way, we are likely to live there for the next five years.Given that the rent is €1000/month that equates to €60000. During this time the 3 other siblings will have contributed €0. But at the end of this time her share will stay the same as will theirs.

So in essence it's not a good deal for us and that money would be far better invested in our own property.
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Look at it this way. The house is on the market to rent for €1000 per month and you rent it to strangers for €1000 thus covering mortgage repayments. In this scenario you still have to pay for a place to live elsewhere and you wont get any discount.
If on the other hand you decide to live there as tenants to the landlords ( her parents) you will be availing of the service provided and paying the asking price €1000. If you were to pay one third of the asking price there then is a shortfall of €666 per month that will have to be paid up by her parents. Can you not see that you are not being logical, the house is an investment and your girlfriend owns shares in it.

If the house was lying idle would you accept that she pay 1/3 of the mortgage repayments or is it all take take.
 
jakfrost said:
To put it this way, we are likely to live there for the next five years.Given that the rent is €1000/month that equates to €60000. During this time the 3 other siblings will have contributed €0. But at the end of this time her share will stay the same as will theirs.
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A strange way of looking at it. You're paying for the use of a property. If you were renting from a stranger, you'd hardly expect to own a piece of the property after 5 years. You're paying for a service.

On the other hand it's important to make a distinction here. You're going to paying rent, not paying a mortgage. If you're paying the same rent as the previous occupant and in line with the current market in that part of Ireland, that's fine. But if you're being treated like a tenant, your rent shouldn't necessarily cover the mortgage. It's not your problem if interest rates increase or rents decrease further. Also the other siblings should be paying 2/3 of any maintenance required during the rental period.

The whole business sounds like a mess from the very start. If you decide to go ahead make sure you iron out the details before you move in and make everything formal. But if I were you I'd probably consider renting from a stranger, assuming that your girlfriend can find another tenant for the property. You could easily fall out with her family over this.
 
Or try looking at it this way.

Lets say you and a sibling of yours own a property that can be rented for 1000 a month.
Lets say your sibling moves into it.

Woudl you be happy to contribute 500 a month in that scenario given that you are would also be paying rent/mortgage on the place you would be currently living in?

If that was the deal then you'd be mad to gladly let the sibling live there. Presumably you'd want to be living there yourself instead for 500.
 
Thanks for clearing the matter up for me.I guess i was thinking of a 'buy to own' scenario which clearly isn't the case.

Feel free to close this thread.
 
Dont Forget. As your girlfriend owns a third of the property she is entitled to a third of the rent. If you and her pay 500 each she is entitled to 333.33 of that back, with the other siblings getting the 666.66 between them effectively. It does not matter if this 1000 meets the mortgage repayment or not. Between the 4 siblings effectively a grands worth of rent is being paid. Between them (or subsidized by the parents) the rest must be made up to pay the mortgage.

You should only pay a going rate for the apartment and not the actual mortgage repayments.
 
buy out the other 3 and get yourselves on the property ladder.
Forgot to mention it will be dodgy claiming rent relief and any form of tax evasion is disgraceful. Think of it. First time buyers grant, mortgage interest relief, income tax, stamp duty, gift tax issues on eventual disposal - that s a lovely mess they've created for your girlfriend.
 
If the house was purchased in your girlfriend's name only, then is the mortgage in her name and are the deeds registered in her name as well?

The reason I ask is that are future implications for all the siblings involved. If the house is in your girlfriend's name and she used her first time buyers status she shouldn't have rented the house out without paying stamp duty etc. Revenue have been looking into this recently knowing full well it has been happening all over the country.

If the house is sold in the future the gains will be liable to capital gains tax on the time that the house was rented out. If the other siblings names are not on the house then revenue will treat the transaction as if your girlfriend is giving her siblings a gift of money which could be liable to capital accquistions tax as well.

It sounds a real mess to be honest and is going to be a minefield to sort out in the future. I hope they have some sort of contract between the family members. If I was you I'd steer well clear of this family arrangement and either rent another place with your girlfriend or purchase another property with her. What happens in the future if you don't stay together - will you feel resentful that you will not benefit in anyway from this arrangement?
 
Currently the siblings are contributing zero to the mortgage but when you get a roof over your head they should start to pay.

Sometimes it's hard to see the wood for the trees so it's good that you raised it here rather than at the next family get together.

However, the next time it might be the siblings using fuzzy logic as to why you should be contributing more and this is exactly why I would keep well away.

What happens when you've been there a few years and it needs to be repainted or the plumbing goes or any of the myriad of costs assocated with owning a property arise? Will the siblings still contribute as 2/3 landlord?
 
This is a complete mess. A house owned by your girlfriend actually belongs also to her siblings but not legally. She got a grant but this could be clawed back as it is an investment property, ditto for stamp duty. Plus penalties and interest. Is the 'rent' being offset against the mortgage for rental income reduction as well? Was the rent even declared in the past to revenue.
You are not paying the mortgage at all you are paying rent to your girlfriend and her siblings. You have no ownership of the property but you are beginning to think you do? What would happen in 5 years time if you split up, do you think you would be entitled to a share of the house, or a share of your girlfriend's third. I wouldn't put a foot inside the door if I was you.
 
One way to do it is to pay 1/3 of the rent/mortgage and ask siblings to pay the other 2/3 .Now they have the right to move in with you, but hey say they don't wont to and you don't want them to_Ok so 2nd thing to do is for them to rent out 2/3 of the house to tenants.And you all live happy together,right don't think so. I think you are missing the point if the whole situation, Please do not say a thing and if you have already just say sorry that you got a little excited.
Remember you only have to pay 1/3 if the 2/3 siblings decide to move in. Remember the key to this is that you have the house to yourselves. Please don't rock the boat, put the shoe on the other foot
 
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