Cohabiting couples are the fastest growing demographic according to the latest National Statistics. In 2017 there were 19.0 million families in the UK, a 15% increase from 16.6 million in 1996, of those, married or civil partner couple families remain the most common, but cohabiting couple families were the fastest growing.
Although the largest growing demographic, unfortunately the legal framework for cohabitees has not changed for centuries being reliant on costly, uncertain litigation, instead of fundamental change in law to give rights to cohabitee’s. There have been numerous initiatives and indications from the government that a change in law is needed for cohabitees but to press none have been successful due to the complexity of the law and its impact on how it should be separated from the rights of married couples.
When purchasing a home as cohabitants you have several options. You could buy your home as a joint tenant with your partner. Joint Tenancy assumes that you own the property in equal shares and that if you were to die before your partner, that your share of the home would automatically pass to your partner. This may not be your intention, especially if you have children from a previous relationship. It also implies that if you separate you both receive equal shares of the net proceeds of sale from the property, even if your contributions to the purchase price were unequal.
When a couple buy their first property together, there is often the tendency to brush over such issues, not wanting to jinx the relationship by suggesting it might fail. However, unless you define at the outset what your respective interests in the property as Tenants-in-Common, in all likelihood your then former partner will try and claim more than what is their fair share. Fighting these types of cases is costly and the likelihood of success low, as you would have been advised by your conveyancing solicitors when you bought the property your rights as a joint tenant.
A Cohabitation Agreement or Declaration of Trust allows you to set out your respective interests in the property. It can also deal with things that might happen in the future, for instance would your respective shares change if one person made a significant contribution to the mortgage advance, or if one of you paid for improvements or building work on the property? The agreement can also set out what would happen if you do separate, would one of you purchase the other's interest, if so how would that interest would be calculated? It could also set out a timeframe for how and when a sale or transfer would complete. Having an agreement about how things will happen if the worst happens takes the stress out of buying and selling a property. Often when couples separate it is these very issues which can cause delay and incur legal costs if parties cannot agree.
Even if you have already bought your home, if one of you is thinking of making a considerable investment in the property, then you may want to consider entering into an agreement which sets out your new interest. Although post acquisition contributions to a property will be considered by a court, the costs, time and upset of having to ask a court to decide can be avoided by setting out your intentions in an agreement.
Agreements of this nature are becoming more and more common and are attractive to couples who have been divorced, older couples with children and inheritance to protect and younger couples where parents have contributed significant amounts of capital to help a child buy their first home. We also see more and more friends buying properties together. Entering into an agreement can save upset and heartache down the line and means you can enter your new home or investment safe in the knowledge that you have done what you can to protect your interest.
If you would like any advice regarding protecting your interest, please contact Alison Gaddes at [email protected]
