House prices are currently at an all-time high. Although there have been some whispers of a housing market slowdown, there’s no question that the cost of housing in the UK means that buying a property is one of the biggest investments that many of us will ever make. Given the cost involved, it’s not surprising that many of us buy with someone else, often a partner. But how do you protect all the blood, sweat and tears that has gone in to that investment if it all goes wrong?
A magnet for disputes
Properties – who owns what, where the equity lies and how it can be divided – remain one of the most common dispute areas during a break up. Hours and hours can be wasted trying to establish what each of the parties should walk away with and it’s often difficult to find an arrangement that everyone thinks is fair. When long-term relationships end, most people find themselves in one of the following situations:
- With a rented property
- With a property in one partner’s name
- With a property in joint names
Complications can also be introduced where there are children and where a couple is not legally married (or civilly partnered) but have been cohabiting instead.
Leaving a rented property
This is the least complex of all the situations that can occur when a couple splits, as there is no value or equity in the property to consider. Once the contract has been legally brought to an end the two parties can go their separate ways. Housing association properties can be a little more complex, however, for most splitting couples leaving a rented property just means going through the motions of giving notice and then finding somewhere else to live.
Leaving a property that is jointly owned
If both parties have contributed equally then this should be a fairly straightforward split down the middle – put the property on the market and split the profits 50:50. Where there has been an unequal contribution of equity, or one person has paid more towards the mortgage, this is where problems can arise. It’s important to ensure that wishes are recorded in black and white when the property is purchased so that there can be little debate at a later date. Using a Solicitor is a good idea to ensure that any solution proposed works for both parties – and is legally compliant.
Leaving a solely owned property
There are many ways in which a person whose name is not on a property title may still have a claim to part ownership of it – for example if they paid for an extension or made mortgage contributions. This is the territory where the real disputes arise, as there can be a lot of emotions involved. The key is to handle it before any break down – either by creating a cohabitation agreement or putting the property into the shared names of the parties when relations are positive and have a future.
Additional complications: children and cohabitants
There is little – if any – legal protection for couples who have been cohabiting, rather than married or civilly partnered. Unless it can be shown that a financial interest has been acquired in a property or that a partner is responsible for dependent children, financial redress is often not available. However, it’s possible to ensure that finances are split in a fair way by drafting a cohabitation agreement towards the start of the relationship. Bear in mind that dependent children are a significant complication to a separation as, regardless of the status of the parents, maintenance must be paid for dependent children and, when it comes to property, one parent can make a claim against the other for housing provision.
Separation is a complex business. However, whatever your situation, it’s crucial to make sure you have a written record, well in advance, that sets out how to proceed with your property if things do go wrong.