Advice for Cohabitating Couples Looking To Buy Their First Home Together
Christmas and New Year are a golden time for romance, and many couples choose this time of year to make plans for the future.
2018 seems to have a magical ring to it, given we are looking forward to another royal wedding thanks to Prince Harry and Meghan Markle.
And the good news keeps coming.
In the Budget, released in November, Chancellor Phillip Hammond announced that Stamp Duty Land Tax (SDLT) would be abolished for first-time buyers from 22nd November 2017 for any home purchased for £300,000 or less. The existing rate of 5% will apply between £300,000 and £500,000. The relief will not apply to properties above £500,000.
If you are currently renting with your partner or thinking of moving in together but do not wish to marry or enter into a civil partnership, it is important you are aware of how to protect your best interests.
After all, no one enters a cohabiting relationship expecting it to end, but unfortunately, many do.
How to purchase your property
The first thing you need to decide (after you have found the property you wish to purchase), with your partner is the type of legal ownership arrangement. There are two main options, namely:
- one of you owns the property outright
- you own the property as joint owners
If you decide to purchase the property jointly, you need to choose between being ‘joint tenants’ or ‘tenants in common’.
If you choose to be joint tenants, you and your partner will own the property in 100% shares. This may be a solution if you are both putting in equal contributions in the form of a deposit and paying the same amount on the mortgage. One of the advantages of joint tenancy is that if one of you dies, the property will automatically pass to the surviving partner.
However, if one of you has more money for the deposit, or due to earning more, one plans to pay more towards the mortgage or other bills, then owning the property as tenants in common in unequal shares may be a more attractive option.
Protecting your interests with a cohabitation agreement
Contrary to popular belief, there is no such thing as a ‘common law spouse’ in English law.
At the time of writing, cohabitees do not have any legal rights, although there is a Bill currently working its way through the House of Lords aiming to change this[1].
Given the fact that cohabitants are the fastest growing family group in the UK, it is inevitable that the law will have to eventually reflect the reality of family dynamics in the 21st century.
Baroness Hale, the first female president of the Supreme Court, recently told The Times she believes the law needs to address certain injustices of family law, in particular, the lack of rights for six million cohabiting partners[2].
Therefore, having a cohabitation agreement is imperative to ensure your rights are protected should your relationship falter.
This is especially true if you plan for only one of you to have your name on the property you plan to live in together.
It only takes a quick Google search to uncover horror stories of people who have lost everything after their cohabitating relationship ended. One woman told The Guardian that she walked away from her partner of a decade with nothing.
“I stayed at home and focused on bringing up our two children. When we spilt, and he went off with a younger woman I found I had no automatic right to a share in the property. I haven’t been paying towards the mortgage or bills because I’ve been a stay-at-home mum. I feel I’ve lost my home, financial security and dignity,” she told reporter Harriet Mayer[3].
A cohabitation agreement will set out exactly what each of you is entitled to, should you decide to separate. For example, you can document:
- the amount of money each of you put into the property in the form of a deposit
- how much each of you will pay towards the mortgage, repairs and improvements to the property
- if you separate, would the property be sold, and if so, what percentage of the profit will each of you be entitled to
Cohabitation agreements can also stipulate how other assets will be divided if you and your partner separate. This can include savings, second homes, pensions and personal belongings.
Don’t forget the Will
While you are organising the legal aspects of your property purchase and a cohabitation agreement, make sure you remember to have a Will drafted.
This is especially important if you decide to purchase the property as tenants in common because if you die intestate (without a valid Will), your partner has no right to inherit your share of the property or any other possessions you own.
In summary
Deciding to purchase your first home together is an exciting move. As long as you take precautions to ensure your long-term interests are protected, there is no reason to hesitate.
A solicitor will be able to advise you on the best actions to take, given your circumstances.
By investing the money you will save on SDLT in solid legal advice, you can be confident that you will not be left out in the cold (literally) should your relationship not survive long-term.
Bennett Griffin are award-winning solicitors based in West Sussex with offices in central Worthing and Ferring. Our experienced and specialist solicitors offer a comprehensive service and will work with you in an honest, considered, and practical manner. Our family law and residential property department can advise and assist you in relation to buying your first home with your partner. Please contact us on 01903 229 999 or by email at info@bennett-griffin.co.uk for more information.
The information contained in this article is for general guidance only and is not intended to be legal advice. Professional advice should always be taken on the application of the law in any particular situation.
[1] Cohabitation Rights Bill 2017-19
[2] https://www.thetimes.co.uk/article/cohabiting-couples-need-more-legal-protection-says-baroness-hale-tpmbkz6lc
[3] https://www.theguardian.com/money/2015/oct/20/cohabiting-relationship-over-law-split-equitable