Selling a share in a property

[cf85]

Hi all,

Appologies if this is a question that pops up again and again. I'm new to this site and at work so haven't really had chance to fully explore the older threads!

My question(s!):

My girlfriend has recently expressed an interest in buying a half share in my flat. This is something I would welcome in theory however Im not really sure how much she would have to pay. Below are the financial details:

Purchase price: 80000
Deposit: 8000
Mortgage: 72000
Recent valuation: 92500

Would I be right in thinking she would have to pay half of the initial deposit 4000 half of the mortgage figure 36000 and half of the market value increase 6250? 46250 in total?

On another issue; I spent 4000 on home improvements and feel as though these costs should be considered. It is doubtless theyve contributed greatly to the recent valuation. Would this be reasonable/justified? Or is it just my tight northern heritage kicking in?!

I should probably add that it's a rental property that I charge 500gbp for per month, just in case that changes anything.

Any help would be greatly appreciated.

Many thanks.

[Richard Webster]

If you transfer the property into joint names she will have to take on half the mortgage liability (she will be meeting half the mortgage payments won't she?) so she would not be paying you that - but simply half of the difference between the outstanding mortgage and the present market value should be the figure paid.

[cf85]

Thanks Richard, that helps a great deal.

[epictom]

I'm quite curious will you transfer the property into joint names?

[Simon Seaton]

Although not relevant in this case readers should beware of stamp duty implications

[Dan_Manchester]

The calculation I would do is:

Current value = £92500
Current mortgage = £72000
Equity = £20500
50% Equity = £10250

Of course don't forget the legal fees and so on...

[Richard Webster]

The calculation I would do is:

Current value = £92500
Current mortgage = £72000
Equity = £20500
50% Equity = £10250

Of course don't forget the legal fees and so on...

I agree this is basically it. A lot of people who were buying out someone would say that when the house eventually sold they wouldn't actually get £20250 because there would be estate agent's fees and legal fees at that point and so they should be taken off the equity to reduce the figure by £1-2K and therefore the cost of the share reduced by half of that reduction.