My housemate wants to buy me out, but we're stuck on the price

Q I’ve owned a property 50/50 with a good friend for almost five years, but I am now moving on so that I can buy with my boyfriend and my co-owner wants to buy me out.

We’ve had the property valued, but had a range from five estate agents of £425,000 to £625,000, which didn’t help much to determine a price. We struck out the highest and lowest quotes, and have instructed an agent with an asking price of £600,000 to see what offers we get. We have now had an offer of £585,000, which is 2.5% under the asking price.

The tension of course is that the two of us have polar opposite interests – she wants the lowest price so she can afford to keep the house while I want the highest. I feel that an offer of the asking price is achievable as we’ve only had it on the market for two weeks and it’s already below the £620,000 that two estate agents said was achievable.

We’ve agreed that we need to fix some kind of timeline to this process, which I think we can work out, but where we are stuck is first, how we determine the price she should match and second, whether we should deduct the 1.5% estate agent’s fee off whatever price we agree (so on a price of £600,000 she would actually buy my half on a basis of £591,000). I thought we didn’t have to pay stamp duty, but have been reading articles on the Guardian website that imply perhaps we do.

I don’t want to fall out with my friend over this, or be greedy, but I also don’t want to be short-changed, so a fair process is what I’m after. AR

A The first thing to say is that I don’t think it’s fair to waste the time of prospective buyers and the estate agent when you are not in fact selling the house on the open market. It’s one thing to get a range of valuations from several estate agents (although some might say that it’s not fair to waste their time even doing that), but it’s quite another to mislead people into putting in offers so that you can determine how much your friend needs to pay you for your share of the house.

Also, depending on the contract you have signed with the estate agent, even if you cancel it and take the house off the market (which you might want to consider doing) if your friend does eventually buy you out, the agent may still be able to claim commission. This wouldn’t have been the case if you had only asked for valuations as a starting point for discussions with your friend.

How you agree a price could already have been decided if, when you bought the property, you had a deed of trust drawn up that detailed the procedure you would use in the event of one of you wanting out. If you don’t have such a document, you and your friend could adopt a typical approach, which is to take an average of all the valuations or take the mid-point between the lowest and the highest. Doing the former would mean a price of £572,500 while the latter would mean £525,000. Or, as you’ve had an offer for £585,000, you could ask your friend to match that.

Whatever price you eventually decide on, your friend will need your lender’s agreement to take on your share of the mortgage (if you have one), and to find enough cash to pay for your share of the equity in the property. To calculate this, you subtract the amount outstanding on any mortgage from the agreed value of the property and divide by two.

Your friend will also have to find money to pay stamp duty because the amount of the mortgage she takes on plus the cash she pays you will exceed the £125,000 limit below which the tax is not payable.