Cohabitants could soon see new laws introduced which would seek to protect them when a relationship breaks down. What could this look like? And what can cohabiting couples do now to protect themselves in the event of an irretrievable break down in a relationship?
In this insight, Partner and Head of Family, Lisa Dawson, offers clarity on a subject which has rightly confused too many for too long.
The rights of cohabiting couples are often, and understandably, questioned when a relationship breaks down. There is a common misconception that they have the same rights or status as if they were married, often being referred to as the ‘common-law husband or wife’. This misconception seems to be as prevalent now as 50 years ago. We are routinely asked by clients what are the rights of cohabiting couples?
The answer? There is no automatic legal right to claim against any assets simply based on two people’s cohabitation together, regardless of the length of that relationship.
It is a shocking reply when you have spent time and energy building a life with someone only to find you have no automatic legal standing to make a claim if it ends. According to government statistics*, it is believed there are 3.5 million cohabiting couples in the UK in 2020 compared with 1.5 million in 1996. There is no indication that this trend will change and so those numbers are only going to continue increasing.
The legal profession isn’t the only one who believe a review of cohabitants rights needs to be considered. The Women and Equalities Committee has just released a report delving into the rights of cohabiting partners. It seeks to address inequalities and recommend change on inheritance, tax and pensions. One recommendation to improve rights on cohabitation is to implement an opt-out cohabitation scheme.
Rt Hon Caroline Nokes MP is right when she said as chair of the report: “The law has been left decades behind as far as cohabitation is concerned, and this is leaving financially vulnerable individuals in precarious situations upon relationship breakdown or the death of a partner.”
It is not the first time such a scheme has been flagged; the Law Commission suggested the same thing back in 2007. With the changing nature of relationships ever increasing, the lack of protection for cohabiting couples becomes more stark compared with their married counterparts.
Whatever change is brought in, it is some time away from being implemented. So, what can those intending to cohabit or already cohabiting do now to protect their position should the unthinkable happen and their relationship break down? Enter a cohabitation agreement.
One of the most common scenarios to consider whether to enter into a cohabitation agreement is if you are buying a property together. Your conveyancer should discuss with you how you want to legally hold this property (joint tenants or tenants in common) and further whether you wish to hold it in shares other than 50/50. For example, if one of you is contributing more by way of a deposit from your own savings or gifts from family, you may wish to consider a different percentage shareholding. On top of this you could also enter into a cohabitation agreement, setting out what would happen in detail if you were to separate, even in the case of renting together this would be an important consideration. The types of specifics that can be added are, who would move out in the interim period prior to sale or transfer, who would pay what in terms of contributions to outgoings, who would take the family pet? These are just a few areas that a cohabitation agreement can cover.
If you are the person putting all the money into a property, even where the property is in your sole name, it is still worth considering entering into a cohabitation agreement in order to prevent any claims being made against your property.
It is also worth considering a cohabitation agreement if your circumstances change even if you are already cohabiting and have not had an agreement before. For example, if one of you received a sum of money through inheritance or compensation and you were intending to pay off the mortgage. Unless you also relook at how you hold the property you may be giving your partner half of that lump sum when that was not your intention.
Whilst it may feel counterproductive to discuss the ending of a relationship when you are at the beginning, the conversation will be far more productive and reasonable doing it when you are in a loving relationship compared to how matters may be in the event of and at the time of a separation.
Please contact the Family team to discuss the benefits of a cohabitation agreement and how it could help you and your partner going forward.
*The total number of cohabiting couples has increased from around 1.5 million in 1996 to around 3.5 million in 2020, an increase of 137%. In 2020, 18% of couples that lived together were cohabiting rather than married or in a civil partnership. Trends differ between opposite-sex and same-sex cohabiting couples. Figures taken from here.