Under Payment of Rent for 3 years!

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clareG

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I hope someone can advise me please. 3 years ago a friend got a mortgage of 235000 to purchase a property for me to rent from her while I was waiting for my seperation to come through (still waiting). Part of the loan was put on to her existing mortgage and the balance for investment. I was paying 1200 per month she has now told me that it should I should have been paying 1657 per month and not only do I now owe her 3 years back money but have to face this big increase. I had hoped to buy from her and still do. We will work the method of payment out but she has never claimed TRS nor have I claimed relief on the rent and I don't know if it will make any financial difference to either of us. Please advise and thanks in anticipation. (she was working abroad and only noticed the payments when she returned recently).
 
She cannot claim TRS because she was not living in the house. She needs to pay Income Tax on the rent she has been receiving from you. She should be able to deduct the mortgage interest and certain other allowable expenses. Given that she was working abroad, she should take professional tax advice on the amount of income tax she owes on the rental income.

You can claim rent relief on the rent that you pay.
 
Seems a strange arrangement. Are you renting or paying back the mortgage? Is she paying tax on your rent payments? Does she qualify for TRS as you say its a topup on an existing mortgage. Surely if its rent your paying she cant ask you to pay back 3 years arrears because she got her calculations wrong.
 
Surely if its rent your paying she cant ask you to pay back 3 years arrears because she got her calculations wrong.
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That would normally be the case, but it appears the friend took out the mortgage for the purpose of helping claraG.

Presumably you didn't sign an agreement on the exact terms?

How much did the house actually cost? A repayment of 1657 equates to a mortgage exceeding 235000, so it 'appears' too much, particularly as from your perspective it should be an 'interest only' mortgage. Also you said that not all of the mortgage went to buying the house - can you better explain the split/breakdown.

For the sum involved (over 15k plus ongoing increase), I'd expect her to explain EXACTLY how this arose so you are clear and are happy this is legitimate.
 
Thanks for all the comments. We have decided to sell anf try and get a mortgage of our own.
 
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