It is reported that couples now spend an average of £14,561 on legal and lifestyle costs when they divorce or separate, new figures show. The average bill for a relationship break-up has risen by 17 per cent since 2014, fuelled by rising legal fees for resolving disputes over children and finances, according to the latest family finances report from Aviva, the insurance company.
Below, Jess Walter provides some guidance on how to resolve problems over buy to let properties.
5 Questions to Help You Untangle Your Buy-to-Let Property During A Divorce
There are over 500,000 privately rented apartments in England alone, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/620661/PRMS_Statistical_Release_22062017.pdf and many of these are buy-to-let properties that couples have invested in together. What happens in the case of divorce, when a couple must divide assets?
The buy-to-let property will need to be handled carefully, and professional mediation services can help couples decide how to best divide property assets. There are four key concerns to consider with regards to a buy-to-let apartment. It might be helpful to begin answering these questions while you schedule professional help.
1. When Was the Property Purchased?
Look through your paperwork to find the exact date that you or your partner purchased the property. Was it before the marriage, or after? If it was before the wedding, begin to think about the ways that the use of the property changed, if any, once the marriage occurred.
For example, a property may have been purchased and rented out by one spouse, and then when the union happened the rental patterns changed. Perhaps the new partner in the arrangement was able to do upgrades to the property, and the rental units could command a higher value per month.
2. Who Put Work into The Property?
This question is a great one to think about because it will show the value that each partner added to the property. When this is clear, it will be easier to divide the asset amount equitably.
3. Is Either Member Interested in Keeping the Property?
A buy-to-let apartment is a unique form of investment. Usually, this type of investment requires that the owner or owners of the investment perform the duties of a landlord. These responsibilities might be minimal, such as finding a tenant every few years, but they might be quite extensive.
If you are going through a divorce, you might want to consider whether you or your ex-partner want to keep performing the duties of a landlord. One of you, or both of you, might move to a new location which might make it harder to be a landlord. This question can bring a great deal of clarity.
4. How Much Yield Does the Property Deliver Per Year?
A buy-to-let property makes a profit each month from the rent that is collected, but this isn’t the whole picture. There are also expenses to consider, such as repairs, taxes, and legal fees. You will even want to think about the number of months that the apartment is vacant per year. The yearly total profits minus expenses, with vacancies accounted for, will be a helpful number to see. When you begin to break down the details of investing in a buy-to-let property,http://probuytolet.com/family-buy-to-let-mortgages-family-letsregulated-buy-to-let/
you can see the situation more clearly. By answering these questions, you might discover that one partner is more involved, invested, and interested in the property than the other.
A mediator can help you and your partner map out a route to a fair solution. https://www.gov.uk/money-property-when-relationship-endsThis may involve one partner buying the other out so that the investment can stay intact. It could also mean selling the property and dividing the profit. The answer will be unique to you, and your specific situation.
Jess Walter