Home ownership has long been viewed as one of life’s milestones.
Couples arguably place a particular premium on having a place of their own, especially those who perhaps want to start a family.
However, taking a first step on the property ladder has been a challenge for many people in the UK for some time.
New figures published by the Office for National Statistics (ONS) not only show that the average price of a home in England last year was £290,000 but reveal that housing has generally been unaffordable since 2006 (https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/housingpurchaseaffordabilitygreatbritain/2024).
That is particularly true in London and the South East where property is considerably more expensive.
It is little wonder that some – particularly individuals who are younger and yet to fully establish a career – turn to parents and other family members to help out.
Earlier this year, research by one leading estate agent found an increase in parental support (https://www.savills.gg/insight-and-opinion/savills-news/376516/bank-of-mum-and-dad-paid-out-%C2%A39.6-billion-in-gifts-and-loans-in-2024).
But relying on the so-called ‘Bank of Mum and Dad’ can come with strings and risks attached – especially, I would suggest, when help is used to buy property for children who are unmarried.
Parents naturally want to ensure that their children are taken care of but, if that support is not structured in the right way, it can cause problems.
For a number of years, myself and my colleagues have dealt with parents who insist that their children have pre-nuptial agreements before providing the cash to help pay for a marital home.
They want to protect that support from the very real risk of divorce.
More ONS’ data validates that reasoning. Forty-one per cent of marriages end in divorce before the spouses involved are able to celebrate their silver wedding anniversary (https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce/bulletins/divorcesinenglandandwales/2023).
We don’t know how many unmarried relationships fail. Yet what we do know is that far fewer couples draw up cohabitation agreements before moving in together compared to the pre-nups available to their married counterparts.
Unlike marriage, there is no formal process by which the assets owned by cohabiting couples are divided.
Instead of family law governing the financial remedy for husbands and wives, cohabitees’ disputes which do not feature the living arrangements of children are resolved according to property law, especially the Trusts of Land and Appointment of Trustees Act 1996 – known as ToLATA, for short.
Claims brought under ToLATA are not governed by the principle of fairness which is inherent in financial proceedings dealt with according to family law.
Instead, the case is determined by the parties’ respective legal and beneficial interests in the property in question and, as such, can be complex, time-consuming and expensive to resolve.
Sadly, I am handling far more of these disputes than I used to.
Many have common elements, including someone’s name being added to the title deeds of a house once they move in or a property being bought in both joint names, even if that home was mostly funded by one person or even that person’s parents.
We also see cases at the heart of which are contributions made by one party to a property not held in their name.
In one respect, I am not exactly surprised. After all, the latest statistics show a 73 per cent increase in cohabitation in England and Wales in 20 years (https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/bulletins/populationestimatesbymaritalstatusandlivingarrangements/2022).
Given that relationships do break down, it is natural to assume that not all will do so amicably.
It is true that there has been parliamentary pressure for the Government to honour a pledge in its General Election manifesto to introduce legislation relating to the financial rights of cohabitees when they split up.
Ministers have yet to announce when a consultation on the matter promised earlier this year will take place (https://committees.parliament.uk/publications/46636/documents/238516/default/).
If there is to be legal reform, it is not likely to happen in the very near future, simply because of the length of time which bills take to navigate their way from the House of Commons to the Statute Book.
That means parents, cohabitees and their financial advisers should take the most appropriate measures possible to protect their investments from the risk of cohabitation collapse, along with the stress, friction and cost that it can also create.
The most suitable step of all is to put a cohabitation agreement in place, setting out who brings what to an unmarried relationship and what might happen to respective property if it doesn’t work out.
Whilst that might seem too cold and pragmatic for some people, the alternative uncertainty is a far less welcome prospect.
If, as the ONS reports, property is generally unaffordable now, it may become even less so for those individuals who have experienced a trying cohabitation dispute.
