28 lines
3.5 KiB
Plaintext
28 lines
3.5 KiB
Plaintext
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title: "Three becomes two"
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---
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I sold a house today!
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It was a bit anticlimactic. The buyer was my sister, and she's been living there for years anyway - all by herself, since we moved to Shetland.
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I promised it to her "at cost" when we moved - I'm iffy about the general idea of making money out of housing - but she couldn't get a mortgage to buy me out in the traditional way. Morally, she's been the owner since then, but my mortgage got in the way of doing the legal bit.
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Instead, we operated on a "mortgage proxy" basis, which is a term I totally made up. The house got split into 300 imaginary tokens (12 months * 25 years = 300 tokens), allocated based on who made the mortgage payment in a given month. The balance was assigned to the bank. Once that balance reached zero, we agreed that the house would be signed over to her, and we'd figure out what to do with the tokens I held afterwards. It's been a very handy conceptual tool.
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The share money allowed me to repay the mortgage, emptying out the bank, much earlier than we originally imagined - about 15 years early! We kicked off the process in December. Doing anything non-standard in housing turns out to take a lot of time!
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After paying off the mortgage, I held ~85% of the house, and my sister ~15%, according to the tokens. This was a much more uneven distribution than we'd originally imagined, but the average price per token was also much lower, since a lot of interest no longer has to be paid on borrowed money.
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What we settled on was to make an interest-free paper loan for the price I'd paid for my tokens. That, plus the price of her tokens, was the purchase price of the property. When signing the house over to her, this loan was codified as a charge on the property, like any mortgage loan would be, so I guess I'm a mortgage provider now. This approach seems pretty flexible - I suspect we'd have used it even if we'd stuck to the original timescale.
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The house is now entirely my sister's property, and I have no way to repossess it, but she can't sell it without repaying the paper loan with real cash. She's planning to live there for the rest of her life, so she's repaying it in monthly instalments instead, but she could choose not to, and I wouldn't be able to do anything about it. Fortunately, there's a lot of trust between us. It's very clearly not rent, though, and the levels set mean there's no profit, which is a big deal for me.
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We're not yet sure how to prevent the price of the house bouncing back to "market" levels post-mortem, or if she changed her mind and decided to sell. That bounce would be hers, or her estate's, of course, but it would be awesome to have a class of houses that didn't appreciate like "normal" houses do.
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Ideas on a postcard - the best I've come up with so far is a "no landlords" restrictive covenant that might act to depress the market price for the property. Some new builds already have this, although the examples I've seen all expire after a short number of years.
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So, two houses remain in my possession - Shetland, and the new Yorkshire one. No matter what I do, I'm making a loss on the former when I sell it, just by virtue of the structural works it's needed, so the anti-profit imperative is much weaker for that one. I might try to get it into the council or local housing association (Hjatland) portfolio, but if that fails, I'll have to sell a house through an estate agent for the first time ever. It might be a good test case for the no-landlords clause.
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However it goes, it will be nice to be back down to a single house. It's been a stressful few years.
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