Senior couple looking out through house door

Moving in together: top tips for cohabiting couples

Whatever your stage in life, moving in with a new partner is an exciting next step. However, many people are unaware that making this commitment in your relationship can have serious legal and financial implications.

According to family law organisation, Resolution, nearly half of unmarried couples are not aware that they lack certain legal rights if they separate. Many wrongly assume that they will be considered “common law spouses” and that the law will protect them on a future separation. This is not the case (there is no such thing as a “common law spouse” in law). Cohabiting couples are not afforded the same treatment as married couples on separation. The claims a cohabitee can bring are limited to property claims and claims on behalf of children. Without proper protections in place at the outset, one party can find that they are left financially vulnerable if the relationship breaks down.

This article sets out some of the practical considerations which you should bear in mind when moving in with a new partner to ensure that you are protected, legally and financially, if things don’t work out.

Are you both on the same page?

Are your feelings towards the responsibilities of living together compatible? Do you both feel comfortable with the financial obligations, the maintenance of the property, keeping up to date with the paperwork, and importantly, openly discussing your finances?

It is far better to discuss these issues up front, so that you have a mutual understanding and (hopefully) avoid problems at a later stage.

Who is paying what?

If you are buying a property together, it is a good idea to discuss and agree:

  • How much you will each pay towards the deposit and costs of purchase); and
  • How much you are able to borrow together for the mortgage (if needed).

In addition, whether your are buying or one of you is moving in with the other, it’s worth considering:

  • Who will pay the monthly mortgage repayments;
  • Who will pay all the other regular outgoings e.g. council tax, electricity, insurance, maintenance etc; and
  • A detailed budget, and how much each of you is to contribute towards living expenses.

What shares will you each have in the property?

If one of you has paid more towards the deposit (or even the whole of it) or, if one of you earns more than the other and will be paying more towards the outgoings, some couples feel that it is fair that the higher contributor should own a larger share of the property. If your payments towards the deposit, mortgage repayments and monthly outgoings are likely to be similar, then you may want to ensure you each have an equal share in the property.

It is sensible to discuss and agree this before you buy a property together, or before one of you moves into the other’s house, and very important to ensure that any decision you make is documented in a properly drafted legal agreement. If you are buying together, your conveyancer can ensure that the deeds of the property can accurately reflect your decision.

There are different ways that interest in property can be legally recorded, and this can have an impact on what you can do with your share, and what happens to your share on death – whether your share passes to the co-owner of the property or through your estate (via your Will or the Intestacy Rules). It is important to get legal advice about the differences here, so that you fully understand the decisions you are making about the future of your share of the property.

Record your decisions in writing

If you are buying a property together, your agreed shares can be recorded on the title register to your new property (ie the “deeds” to the property). It is sensible for this to be supported by a declaration of trust, a document which states the specific shares of the property that you will each have and how the proceeds will be split on any future sale.

If one of you is moving into the other’s property, consider whether any agreed interest the non-legal owner will have should be recorded on the deeds, and/or in a declaration of trust.

A cohabitation agreement is a more detailed deed which can set out more of the additional details surrounding your lives together, including who is going to pay what towards the mortgage, other large property expenses (such as decoration and renovation), whether this will impact your shares in the property, what you each pay towards monthly outgoings. It can also set out what happens if the relationship breaks down – including if the property will be sold, or if you each have the opportunity to “buy out” the other.

Having these discussions now and recording what you have agreed in writing can make it easier for you both to move on without protracted and expensive legal disputes if the relationship does sadly break down.

Get some good, sensible legal advice

The decisions you make when moving in together can have huge implications on your future financial security. It is important that you understand the legal implications of the decisions you make. A solicitor with expertise in advising cohabiting couples (both when moving in together and when separating) will provide you with valuable advice so that you can make an informed choice as to how you can best legally protect your interests.

Increasingly, parents are helping younger couples to get on to the property ladder. In that situation, it is important that all parties (including the parents) get independent legal advice to ensure that their wishes are reflected.

What if things don’t work out?

If sadly things aren’t working out in your relationship and separation is looking likely, it would be sensible to seek legal advice before separation, or as soon after as possible. This will hopefully ensure that your separation and the division of your finances is handled in the most efficient way, to establish a conciliatory approach from the outset and to aim to find a sensible solution, without the need to refer matters to court.

For more information in relation to the issues raised in this article, please contact Sarah Green.